About a year ago we wrote up a four-part blog series around third party risk. As we prepare for a webinar at the end of this month – Third-Party Risk Management Efforts 101: Aligning Supplier Onboarding With Contract Onboarding – I thought it would make sense to revisit the topic by delving into another industry from where I left off…
The industry that first came to mind was life sciences (pharmaceutical, medical device, and biotechnology companies). There are several reasons for this, but one of the most important for me is personal experience. A few years back, I went through chemotherapy and an autologous stem cell transplant for Hodgkin’s Lymphoma. The experience was an amazing, yet humbling, one that reminds you of how much we rely on modern medicine.
Now, think of your own experience, or those of family and friends who take life saving medication. The controls and risk mitigation that must be in place for the safety, manufacture and operational distribution of these life-saving medicines is critical to the success of the global life sciences supply chain. In this regard, I can’t think of another industry where the task of managing suppliers is so crucial for both the safety and well-being of billions of people who take medicines world-wide every day.
Putting risk under a microscope.
To manage the complexities of the supply chain in this industry, a life sciences company is likely to use many different types of third parties that employ technology throughout their value chains, from R&D to marketing. With access to both direct and indirect sensitive information, such as intellectual property, clinical trial patient health records, and proprietary product development data, those third parties pose a risk to the organization outside of the four walls if not properly managed. The ability to clearly monitor and manage the information, spend and performance of these suppliers is essential.
In this regard, according to a recent global outlook report by Deloitte, many life sciences companies are spending considerable sums to fix operational and compliance issues caused by an outdated IT infrastructure. For example, an infrastructure designed around an impermeable core may hamper external collaboration, an important element of open innovation in R&D. From a compliance perspective, outdated IT systems may stymie efforts to meet mandatory FDA GxP requirements for pharma manufacturing and product quality.
Managing risk with flexibility and adaptability.
In an industry that combines high regulatory requirements with growth and consolidation, life sciences organizations need a platform that provides flexibility and control for managing third parties; one that gives them the ability to manage the complexity of third-party data and processes in a consolidated and harmonized way. These capabilities include some of the following:
- A common data model for suppliers and contract information: Manage the entire data lifecycle for third-party information or contracts, ensuring data is valid (reviewed), consistent (entered only once, correctly referenced in contractual documents) and correctly updated (not expired).
- A single repository for third-party data: Creating a “source of truth” for all information that includes bank accounts, locations, certifications, (quality) performance metrics and all contracts related to that third party.
- Configurable / extensible workflows: Establish workflows that route third-party information requests to the appropriate employees.
- Event-driven information requests: Initiate action on third parties based on changes to internal processes or external regulations.
- Validation between supplier information and contract management: Counterparty contract creation validated against third-party supplier profiles prevents the use of contracts without proper certifications or fully onboarded suppliers.
Part of the challenge is that life sciences organizations, regardless of size or region, may be looking to solve different challenges at different times. To help life sciences organizations based on their differing needs, the Determine Cloud Platform is providing technology that applies to various aspects of managing third-party risk:
- Managing Upstream Spend — In one US-based pharmaceutical organization, Determine is playing a critical role in helping manage supplier diversity during vendor selection. This ability is vital in order to meet its government contract commitment to spend based on small business attributes (HUB Zone certified, woman-owned, veteran-owned, service disabled and small disadvantaged companies):
- Previously, the risk of non-compliance was ever present with inconsistencies in supplier diversity data, combined with the growth of spend data within the four companies involved in the supplier diversity effort.
- Through the use of spend analytics, sourcing, contract management and supplier information management, the company is addressing the problem of spend and supplier data in one location, and allowing suppliers to self-register and self-report.
- By increasing the integrity of their supplier diversity efforts – reducing what previously took 400 man-hours to complete by 50% – the organization created newfound efficiencies.
- Managing Downstream Spend – For a France-based pharmaceutical group, Determine is helping the organization manage a wide range of spend, from research to marketing its medications. This means dealing with many different categories of purchases – goods, services, catalogs, generic goods, etc. The group wanted a solution that would allow it to centralize purchasing and manage all the catalogues from a single platform. This required a flexible solution that could adapt to variations in its business processes to keep pace with the constant evolution both inside the organization, as well as in the industry. Today there are many benefits gained in using Determine P2P technology:
- By personalizing the application, used by 1,600 people, the company has been able to create 119 catalogues featuring nearly 5 million items.
- The 4,000 rules handled by the powerful Determine engine have allowed the company to quickly address any necessary tweaks to the processes.
- The intuitive interface means anyone can use the application without prior training, helping simplify employee onboarding.
- The responsiveness and flexibility of the Determine technology helped the company improve performance by centralizing its catalog management.
To learn more about Determine’s experience and technology addressing life sciences, schedule a personalized demonstration of the Determine Cloud Platform.
Be sure to join us for a 60-minute webinar on September 26 at 1PM ET / 11AM PT with Protiviti and SIG (Sourcing Industry Group) for Third Party Risk Management Efforts 101: Aligning Supplier Onboarding to Contract Onboarding.