Who Picked That Supplier? Cross-Industry Best Practices for Quality Procurement in Biopharma

[Author’s note: ETCH Sourcing is a managed services provider for sourcing and procurement activity, specializing in all areas of supply chain management, including category management, sourcing, contracting, and supplier management. ETCH has worked with organizations across North America on projects ranging from value creation initiatives, compliance and governance transformation, sustainability and digital adoption transformation.]

The Strategic Role of Procurement in Biopharma

In today’s biopharmaceutical landscape, procurement and supply chain management should be strategic partners to enable quality, compliance and resilience.

As global manufacturing networks expand and with increasing organizational reliance on suppliers, Contract Manufacturing Organizations (CMOs), and Contract Development and Manufacturing Organizations (CDMOs), managing consistency, quality, and risk across geographies has become more critical than ever.

The biopharma industry is one of the most rigorously regulated environments in the world, and rightly so. Ensuring patient safety, product efficacy and regulatory compliance requires a steadfast commitment to quality. Deficiencies in the pharmaceutical industry have led to significant financial losses (over $12 billion since 2000), and more critically, interruptions in the supply of critical lifesaving medicines. While many organizations have extensive quality frameworks and systems, their impact is greatest when supported by well-integrated supply chain practices, which translate these frameworks into supplier selection and management. Strong collaboration between procurement and quality functions can unlock efficiencies, reduce risk and strengthen the overall value chain and supplier management – avoiding a later question of: “Who Picked This Supplier?”

In this article, we draw on lessons from other regulated industries and supply chain disciplines to inspire new thinking in biopharma, particularly around supplier collaboration, performance and accountability.

Section 1: Procurement’s Role with Supplier Selection

Procurement is far more than the team issuing purchase orders. It is a strategic discipline that drives value through supplier selection, contract structuring and performance management. In highly regulated industries like biopharma, procurement serves as the facilitator, supporting product owners on selecting external partners who design, build, test, package or deliver critical materials and services.

To be the most effective, procurement teams must be involved early in the sourcing lifecycle, especially when a new part, component or supplier is introduced. When procurement is brought in too late, organizations face greater exposure to performance issues, eroded negotiating power and misalignment with both commercial and quality expectations. Similarly, quality teams are the most effective when brought in early in the supplier selection process to inform supplier choices, steering the selection process away from high-risk suppliers, rather than as an enforcement and compliance division after.

Industry standards such as the Pharmaceutical Quality Systems (ICH Q10) and Medical devices Quality management systems (ISO 13485) reinforce the need for integrating quality into procurement processes. But just as importantly, procurement must be embedded into quality-driven decisions from the start. By understanding and recognizing the roles that these two teams play, and where the collaborative intersections exist, these teams can advocate for early involvement and quality centric supplier selection practices.

Section 2: Collaboration for Better Supplier Relationship Management

Supplier management is a term that is discussed commonly, less often acted upon and planned for almost rarely. While supplier relationships are critical to product quality, regulatory compliance and business continuity, organizations often lack a systematic and cross-functional approach to managing them proactively. In many cases, supplier management is treated as a reactive exercise—triggered by failures, deviations or inspections—rather than as a strategic discipline embedded within the end-to-end value chain. When implemented effectively, Supplier Relationship Management (SRM) encompasses a range of integrated practices:

• Early engagement of suppliers during development and technology transfer;
• Data driven performance monitoring aligned to both quality and business objectives;
• Structured risk assessment tied to criticality and compliance impact; and
• Transparent, bidirectional communication frameworks that support continuous improvement.

The outcomes of strong SRM extend well beyond issue mitigation. Organizations that invest in mature supplier management capabilities consistently realize improved supplier accountability and responsiveness through performance agreements and structures, along with reduced risk exposure and resiliency (1). As the industry continues to navigate increasing complexity in outsourced manufacturing and global distribution networks, building collaborative, quality-driven relationships with suppliers is not optional—it is a strategic imperative. The following are three best practices from other industries that can be considered for inspiration:

Best Practice 1: Tie Quality to Commercial Agreements

In many industries, supplier agreements go far beyond pricing and lead times. Increasingly, companies are embedding quality metrics into contracts, tying supplier performance to measurable outcomes like deviation rates, audit results or timely Corrective and Preventive Action (CAPA) implementation (2).

By structuring key performance indicators (KPIs) with a commercial incentive, organizations can drive accountability and reinforce shared priorities. While well-established in sectors like automotive and aerospace, this practice remains underutilized in biopharma. Likely, within commercial agreements, there are already existing operational and delivery assurance KPIs and service frameworks that can be built upon and extended to quality. Integrating quality clauses into commercial terms does not diminish the role of quality; it strengthens it by making expectations enforceable and business relevant.

Best Practice 2: Build Cross-Functional Governance That Works

Too often, procurement and quality teams operate in silos. They may attend the same meetings, but without shared language, aligned priorities or clear roles, collaboration falters. A functional governance model addresses this disconnect. Leading practices include shared governance attendance with tiered supplier reviews and joint planning sessions. These mechanisms help align cross-functional teams on strategic objectives, supplier oversight, and continuous improvement opportunities.

When done right, governance is not just internal coordination; it becomes a unified, proactive approach that synchronizes messaging and expectations from across the organization, tailored to address suppliers at all levels of risk and criticality to the organization.

Best Practice 3: Supplier Risk Segmentation Tied to Company Risk Matrix

Effective supplier management requires more than just evaluating spend. Advanced supplier management applies supplier segmentation based on spend, operational criticality and risk to the organization. Procurement-led frameworks can classify suppliers into tiers considering the uniqueness of materials, switching difficulty and potential impact of disruption. For example, a Tier 1 supplier might provide a specialized Active Pharmaceutical Ingredient (API) or packaging component, whereas a Tier 3 supplier might offer non-regulated consumables.

High-priority suppliers should warrant more rigorous oversight through joint audits, performance reviews and risk mitigation planning. This structured, risk-based approach allows teams to focus time and resources where they matter most. Furthermore, by applying advanced segmentation criteria, suppliers can be segmented at the selection stage to identify the logical corresponding compliance and quality validation based on the segmentation results, thereby expediting supplier selection and onboarding.

Conclusion: Working Smarter, Together

At the end of the day, the shared goal across the industry is clear: safe, effective medicines delivered sustainably and affordably. Achieving this requires moving beyond functional silos. By enhancing collaboration with procurement and understanding the role different divisions have to play, organizations can embrace quality considerations early and leverage proven practices from other industries to create a supplier ecosystem that is not only compliant but also resilient, agile and performance-driven.

Guidance on procurement policy for the industry will be released in the coming year. We recommend reviewing these policies and the recommendations to embed quality into procurement workflows and policies to create a quality centric procurement and supplier environment.  Moreover, the revised PDA Standard 01-2020: Enhanced Purchasing Controls to Support the Bio-Pharmaceutical, Pharmaceutical, Medical Devices and Combination Products Industries will be available for public review and comment this Fall 2025. You can learn more and look out for its release here.

References

1. Shih, Willy C. “What Really Makes Toyota’s Production System Resilient.” Harvard Business Review, Nov. 15, 2022. What Really Makes Toyota’s Production System Resilient
2. Infographic: 7 Steps in the CAPA Process. isoTracker Blog, Aug. 15, 2022. Infographic: 7 Steps in the CAPA Process