Supplier relationship management in life science

In clinical development, supplier relationship management (SRM) plays a central role in driving success. From biotech supplier management to CRO supplier relationship optimization, following best practices in SRM can help improve supplier performance, streamline procurement processes, and provide a competitive advantage.

Done right, supplier relationship management with your strategic suppliers can have benefits beyond the immediate business relationship, helping you run your clinical trial more efficiently, save costs and resources, and meet your business goals.

In this article, we take a deep dive into vendor management best practices in biotech. Starting with a broad view of supplier relationship management in clinical development, we’ll look at the key components to consider, the challenges you may face, and the impact effective supplier relationship management can have on clinical trials.

In today’s fast-moving life science industry, strengthening your biotech’s relationships with strategic suppliers, including CROs and CDMOs, can give you an advantage in innovation and help forge a path into new markets. But what is supplier relationship management (SRM) and what does it involve?

SRM is a strategic approach life science companies can take to manage communication and collaboration with suppliers that provide products or services, ranging from specialty lab equipment suppliers to full-service CROs.

Biotechs and pharma companies running clinical trials spend an estimated 65% of their funding on vendors, so managing those relationships is a financial necessity and an important step in risk management. Beyond that, fostering positive relationships encourages high-quality service and can build trust that results in long-term partnerships.

SRM establishes the approach and process for interacting with suppliers. Ultimately, it ensures alignment on goals, providing mutual benefits for both parties. With the needs of the biotech or pharma company at its core, SRM starts at the vendor selection process and continues through contract negotiation, performance management and in the day-to-day contact with the supplier.

Successful supplier relationship management starts even before the relationship has been established: that is, in the vendor selection process. Vendor selection is key to ensuring your clinical trial runs smoothly, on budget, and on time. Establishing a relationship with the wrong vendor can be catastrophic for a clinical trial, resulting in additional and unforeseen costs and massive delays, and it can even lead to failure.

Effective vendor selection ensures you choose the right vendor for your biotech and trial. At Seuss+, we have been running our proven vendor selection process for over a decade. Vendor selection works best as a holistic process: putting your company’s risks and needs at the center, there should be a focus on people, taking company culture into account to find a best-fit supplier.

>>>Download our white paper for a deep dive into vendor selection

Choosing a supplier establishes the relationship you need to manage through SRM. The next step in that process is contract negotiation. Far from being only administrative, effective contract negotiation can set a solid foundation for a long-term relationship based on transparency and trust.

A solid contract sets out the agreements between biotech and supplier, clarifying expectations from the outset. It helps reduce risk and provides the basis for supplier performance management throughout the relationship.

The ongoing relationship is managed on various levels, from risk management through high-level governance and vendor oversight to day-to-day performance management. With a solid contract in place and a fit-for-purpose governance structure, performance management should be transparent and regular, based on comprehensive KPIs and metrics. This approach also helps minimize conflict, as escalation and resolution follow an agreed path.

SRM and CRO supplier relationship optimization can be hugely beneficial to clinical development organizations. Although many of the factors involved in SRM are similar across industries, the process for companies in the life science industry is unique, owing to the specific context in which they operate.

Implementing SRM can involve various challenges:

Ensuring compliance: Biotechs and pharma companies must comply with many stringent regulations, including those that hold them accountable for the activities their suppliers undertake. Governance and oversight are the key risk management elements of supplier relationship management to ensure compliance.

>>>Watch our webinar ‘Navigate Vendor Management in Life Sciences: From Compliance to Collaboration’

Maintaining quality standards: Data integrity is crucial to take clinical research to the next stage, and effective SRM needs to take this into account. One important factor is maintaining quality standards in the services of products suppliers provide.

Supply chain complexity: Biotech supplier management can become unwieldy given the complex supply chain structures clinical research can create. A clear, centralized approach underpinned by solid contracts and a fit-for-purpose governance structure can ensure SRM runs smoothly, regardless of how many suppliers are on board.

Resistance to change: The life science industry is fast-moving, and when you’re running a clinical trial, you may need suppliers that are flexible and can adjust with you. This can be challenging, especially if those suppliers are big companies that can be less agile. Ensuring alignment between teams, establishing shared goals, and ensuring effective communication can help get things moving.

Cultural differences: One of the biggest obstacles to good supplier relationships is cultural differences. But it’s also one of the simplest to avoid: by taking a holistic approach to vendor selection, and including cultural factors in the criteria, you can be assured from the start that your values, goals, and ways of working align.

Supplier relationship management is a key success factor for clinical trial companies in general, and it can be especially beneficial for those running clinical trials. SRM can help overcome many of the challenges clinical trials face, from budget constraints to stringent regulations and strict timelines.

Clinical trials must adhere to regulations that differ depending on geography, scope, and phase. Through best practice SRM, a sponsor can mitigate risk and ensure ongoing compliance with relevant regulations.

Since SRM can have a positive impact on maintaining quality of services and products provided by suppliers, it is an important factor for protecting data integrity. Reliable, accurate data is key to clinical research, and provides the basis for taking medications to market.

The clinical trial process can be protracted and expensive, and ineffectively managed supplier relationships can adversely affect both budget and timeline. SRM helps keep clinical trials on track and on budget.

Outsourcing management for biotech companies can free up the resources needed for running the trial and provide assurance that vendor relationships will be managed in a way that will benefit all parties.

At Seuss+, we have over a decade of first-hand experience working with life science companies to set them up for success in their supplier relationships. We understand and can overcome the challenges biotechs and pharma companies can encounter in managing those relationships.

Supplier relationships are the cornerstone of successful clinical research. In the growing and increasingly digitalized life science industry, regulations are evolving and supply chains becoming ever more complex. Managing supplier relationships can forge a path to success, setting clear shared goals that take your company to the next level.

Our life sciences experts work with a range of life science companies throughout the SRM process, from vendor strategy and contract negotiation to vendor management and governance for effective vendor oversight, helping find the right suppliers and optimize partnerships.

Contact us to talk about your needs and get started.