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Managing supply chain outsourcing in life sciences

4 ways technology makes a difference


Life sciences companies—from biomed to pharmaceutical organizations—are on an accelerated path toward growth this year. According to a CBRE report, the industry is growing at the fastest pace since 2000 in response to the need for more innovation, rigorous research and development, and improved health and wellness products and medicines for the marketplace.

To keep up with this fast-track pace, many life sciences businesses leverage third parties like contract research organizations, contract packagers, contract manufacturing organizations and third-party logistics providers (CROs, CPOs, CMOs and 3PLs) to outsource everything from clinical research to supply chain management. This allows the life sciences business to focus on the science and core areas like intellectual property development, while relying on the expertise of third parties to execute on operational business needs.

While the use of outsourcing is a common practice in the industry, some life sciences companies are better at it than others. The more successful are able to leverage emerging technologies as a way to effectively bridge the life sciences business to the outsourced provider. The following outlines four key areas where technology can be that outsourcing difference-maker for a life sciences business, particularly as it relates to supply chain.

Optimized integration

Systems integration is a must with third parties and an enterprise resource planning (ERP) solution can create that streamlined interconnectedness between a life sciences company and its outsourced entities. A competent ERP platform not only means enhanced data sharing and systems efficiencies, along with reduced manual entry and the associated risks of error, but also improved visibility into deviations and exceptions at partner organizations. In addition, the right solution can provide a modernized, automated and secure platform working across the entire business enterprise, including its outsourced providers. In fact, some ERP systems can manage contracts, chargebacks and rebates, and support governmental pricing and regulatory compliance. A key consideration in ERP planning, however, is to identify what data needs to be shared with the supply chain third party, whether it’s accounting information or serial numbers, for instance. Limiting data for the specific contractor for the specific operation can optimize performance and protect against unnecessary exposures.

Better compliance alignment

And speaking of compliance, it’s well known that the life sciences industry is a heavily regulated industry. Increased regulatory scrutiny will likely not diminish. As companies grow and increase their outsourcing needs, it becomes even more essential to anticipate, assess and address compliance requirements on regulations in areas like the Food and Drug Administration validation procedures, identification of medicinal products (a set of five International Organization for Standardization principles), electronic batch records, and 21 CFR Part 11 electronic signature compliance. ERP can help in this effort by tracking product life cycle from manufacturing and distribution to, ultimately, the end user. This track and trace is essential in confirming supply chain systems compliance.

Improved risk and security management

Given the nature of the life sciences business today, with enormous amounts of data exchanged between organizations and their third parties, it’s essential to incorporate risk management and cybersecurity into the third-party relationship. Likewise, another good reason to step up cyber protection includes new privacy regulations in the European Union (EU) which have become more rigorous, even for U.S. organizations. The EU’s General Data Protection Regulation (GDPR) requires all organizations that hold, transmit or process EU resident data to comply with the law, regardless of whether the business or its third party actually operate in the EU. Failure to comply can result in significant financial penalties. The U.S. is following suit with regulations as well, with some states enacting similar protective measures (for example, see California’s Consumer Privacy Act). Emerging technology, like enhanced ERP, can help the life sciences business have the right security and controls in place to discourage hackers, even in a business’s outsourced entities.

Enhanced forecasting

Finally, enhanced ERP solutions and business intelligence technologies can help assess data from the enterprise and its outsourcing partners to allow life sciences company leaders to see a more complete picture of the business. This improved visibility on areas, from cost of services and gross-to-net projections to serialization efforts and performance assessments, allows for keener and more timely decision-making. Life sciences companies, especially those in the pre-commercial environment, utilize advanced systems for cash flow forecasting, timely procurement of clinical materials and budget planning. 

For more on this topic and related business insights for life sciences organizations, check out the following content:


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John Lanza
National Life Sciences Practice Leader