Supplier audits are a critical component of ensuring the integrity of the Pharmaceutical Ingredient Supply Chain. However, evolving supply chains are outpacing traditional audit program methods. Today, effective supplier audit programs require a fresh look at the people, processes and technology involved. The new global standard for supplier audit programs is an agile, multi-faceted model that comprises a disciplined process, optimized key resources, versatile tools and complete stakeholder visibility. This presentation will help business leaders evaluate their supplier quality operations and create a foundation for greater supply chain integrity and improvement.

1. Protecting the Global Supply Chain Through an Effective Audit Program Gerard Pearce

2. TODAY’S LEARNING OBJECTIVES Assess the forces influencing your supplier quality organization Establish and maintain the foundations of a strong, versatile and organizationally visible supplier quality function Monitor and manage critical aspects of supplier quality for consistency, efficiency and effectiveness Anticipate and adapt to the changing supplier environment

3. THIS SESSION Focus on effective system for evaluating suppliers Agenda: 90 30 60 intro forces on supplier quality strong foundations production adapting recap q&a

4. FORCES ON SUPPLIER QUALITY New Decade, Old Challenges Challenges inside your company Challenges inside your supply chain Challenges outside your company

5. FORCES ON SUPPLIER QUALITY Challenges inside your company Resources Vs Requirements More travel More detective work/chasing Connection Standard Tools Greater detail, number and frequency

6. FORCES ON SUPPLIER QUALITY Internal Connection? organizational boundaries Supplier Supplier Supplier Supplier Supplier Supplier Supplier functional boundaries system boundaries quality results OK marginal OK OK OK incomplete poor OK poor OK OK ?

7. FORCES ON SUPPLIER QUALITY Challenges inside your supply chain Moving Target Distance Can’t go, shouldn’t go Mergers, acquisitions, splits and spinoffs Global Financial Crisis Cultural and local knowledge factors CAR Sickness PDA Web Seminar Protecting the Global Supply Chain Through an Effective Audit Program

8. FORCES ON SUPPLIER QUALITY Evaluating an increasingly global supply chain: volume safety language expertise travel expense visibility follow-up

9. FORCES ON SUPPLIER QUALITY Challenges outside your company Regulatory and Industry pressure Global Financial Crisis Environmental Factors Economically Adulterated Medicine Political Climate …factors not usually considered in audit scope

10. FORCES ON SUPPLIER QUALITY So how does a better audit program help? Best use of most valuable resources Can address broader scope Can cover new geography Keeps up with supply chain changes

11. THIS SESSION Focus on effective system for evaluating suppliers Agenda: 90 30 60 intro forces on supplier quality strong foundations production adapting recap q&a

12. STRONG FOUNDATIONS Focus Planning and Staffing Process Tools Training Automation

13. STRONG FOUNDATIONS Focus Supplier Audits are only one aspect of Supplier Quality Regulatory Obligations (ICH Q7: 7.11, ICH Q10: 2.7a, 21 CFR 820.50, etc.) Business Sense (reduced cost of quality, supplier improvement, etc.)

14. STRONG FOUNDATIONS Planning and Staffing I Goals Defined and aligned with corporate strategy Alignment with strategic goals and other functions Low or no Purchasing-Quality ‘Distance’

15. STRONG FOUNDATIONS Planning and Staffing II Resources Wise use of finite resources Based on good data (target hot-spots) Rethink roles and responsibilities (and create new ones for people behind the scenes) Think global, act regional (hubs) Upgrade tools, techniques and systems

16. STRONG FOUNDATIONS Planning and Staffing III Prioritization Strategic Partners Strategic Stinkers Risk Management Regional Coverage risk low medium high high medium performance low

17. STRONG FOUNDATIONS Planning and Staffing IV Standardization Target organizational, system and functional boundaries Leverage organizational quality network Aim for synergy in Supplier Quality Management Develop ‘Best of Breed’ tools and processes Share results and critical data

18. STRONG FOUNDATIONS Process I ‘Manufactured’ Supplier Evaluation Consistency Vs Redundancy Consider all the moving parts and control them Map all activity Free up high-value resources for high-value tasks Invite self-serve visibility rather than reports Steal ideas with pride

19. STRONG FOUNDATIONS Process II ‘Bigger Picture’ Supplier Evaluation View evaluation as part of a larger process Increase the evaluation scope to add value (counterfeit risk, process capability) Exploit ‘Administrative Intelligence’

20. STRONG FOUNDATIONS Tools Consensus on what the tools are and how to use them More than a checklist (templates, notifications, gold samples, lessons learned) Feedback loop through review Share with pride

21. STRONG FOUNDATIONS Training Not all auditors created equal Flexible, team-oriented people How to use the tools Role play What-if scenarios Culture awareness Lessons learned & regular briefing Critique focus

22. STRONG FOUNDATIONS Automation Support the process, not just the results Align with IT strategy and existing infrastructure Eliminate manual steps Monitoring and alerts Facilitate exchanges (beyond Outlook) View towards business intelligence ‘Careful what you wish for… alert!

23. THIS SESSION Focus on effective system for evaluating suppliers Agenda: 90 30 60 intro forces on supplier quality strong foundations production adapting recap q&a

24. PRODUCTION Execution Closing the loop Continuous Improvement

25. PRODUCTION Execution Constant monitoring and action Expanding the scope Measure, then measure some more

26. PRODUCTION Closing the loop Opportunity presented by corrective action Different levels of corrective action ‘CAR sickness’ Managing effective corrective action to close the loop

27. PRODUCTION Continuous Improvement Acknowledge sources of variation Monitoring ‘Production’ (resource utilization, turnaround time, days-to-x, responsiveness) Don’t inspect quality in Lessons learned Feedback into “Use, Improve or Lose” Supply Management mantra

28. PRODUCTION Business Intelligence: program automation and stakeholder visibility Real-time Dashboard Filtered Program Data Detailed Event Status Deployed Team Process Controlled Data Export Complete Results Email Alerts Relational Events

29. THIS SESSION Focus on effective system for evaluating suppliers Agenda: 90 30 60 intro forces on supplier quality strong foundations production adapting recap q&a

30. ADAPTING Optimization and Exception Handling Sharing responsibility Outsourcing Data Sharing it Procedure – Revision 17 Confidential establish a system conducting, quality XYZ Co Quality Management System

31. ADAPTING Optimization and Exception Handling Naturally follows a well-defined process Escalation Why not a FMEA? Reduces roadblocks and ‘too-hard’ cases

32. ADAPTING Sharing Responsibility Obtain commitment up front Data: do it once, do it fast, do it right Develop two-way visibility Buy-in eliminates redundancy, errors Establish ‘Controlled Connection’ through organizational boundaries Opportunities beyond simple transactions Promote a collaborative, time-saving environment www.sqaservices.com - "Global Quality on Demand"

33. ADAPTING “Where is the Quality Manager who can afford so to cover his entire supply base as that a thousand suppliers might not do an infinite deal of mischief?” – apologies to Benjamin Franklin Outsource Acknowledge ‘commoditized’ activities Target necessary, but non-critical activity Adopt ‘co-sourcing’ for specialist or regional skills Use risk-based approach

34. ADAPTING Outsourcing Not responsibility, or the relationship A supplement, not a silver bullet They must be you You still need to be involved

35. ADAPTING Data Sharing: Rx-360 Mission Create and monitor a global quality system that meets the expectations of industry and regulators, that assures patient safety by enhancing product quality and authenticity throughout the supply chain Patient safety must never be compromised as a competitive advantage

36. ADAPTING Data Sharing: Fair Factories Clearinghouse Apparel industry Monitors supplier practices to ensure social responsibility is upheld CHWMEG, Inc Manufacturing and other "industrial" companies, many Pharmaceutical companies Efficiently audit waste management. 217 member companies have saved $27M Learning from other organizations in order to accelerate Rx-360

37. THIS SESSION Focus on effective system for evaluating suppliers Agenda: 90 30 60 intro forces on supplier quality strong foundations production adapting recap q&a

38. RECAP & TAKE-AWAY Forces on Supplier Quality New decade, old challenges - inside your company, your supply chain, and outside your company Strong Foundations Focus, Planning and Staffing, Process, Tools, Training, Automation Production Execution, Closing the loop, Continuous Improvement Adapting Optimization and Exception Handling, Sharing responsibility, Outsourcing, Data Sharing

39. TODAY’S LEARNING OBJECTIVES Assess the forces influencing your supplier quality organization Establish and maintain the foundations of a strong, versatile and organizationally visible supplier quality function Monitor and manage critical aspects of supplier quality for consistency, efficiency and effectiveness Anticipate and adapt to the changing supplier environment

40. THIS SESSION Focus on effective system for evaluating suppliers Agenda: 90 30 60 intro forces on supplier quality strong foundations production adapting recap q&a

41. Questions and further information:Gerard Pearce310-802-4448gpearce@sqaservices.com