Introduction
The COVID-19 pandemic highlighted vulnerabilities across the pharmaceutical supply chain, prompting contract development and manufacturing organizations (CDMOs) to reassess their approach to operational continuity. In today’s complex business environment, CDMOs must prioritize supply chain resilience to mitigate disruptions and maintain reliable delivery.
A supply chain resilience strategy must emphasize long-term planning, robust risk management, and, most of all operational agility. That agility derives from a combination of mindset, systems, and technology.
Supply Chain Resilience Starts with Long-Term Planning
Creating supply-chain resilience in a pharmaceutical CDMO requires good long-term planning. The runway for those plans should be at least five years for most operational aspects, and seven to 10 years for more complex product types, such as peptides.
That future forecast must then be brought into the present, through actions the organization takes now. The long-term plan must be part of the everyday management of the CDMO’s operations, from human resources to equipment updates to plant capacity.
Technology Strengthens the Supply Chain
Investing in advanced technology and data analytics is an essential element of supply chain resilience, enhancing supply chain visibility and the ability to respond quickly to changes. An enterprise resource planning (ERP) system provides a centralized platform for managing inventory, production, and other critical functions. A cloud-based procure-to-pay platform, in turn, increases engagement and diversity within the CDMO’s network of providers. By enhancing transaction ease, transparency, and traceability, digitization improves supplier collaboration and leads to faster, more informed decision-making.
Robust Risk Management Is Essential
All pharmaceutical organizations talk about risk management. Having a truly robust system for this is another matter. A CDMO should constantly assess all the risks to its supply chain. Its risk register should be comprehensive, addressing regulatory compliance, energy prices, geopolitical instabilities, weather hazards, natural disasters, shipping bottlenecks, climate change, economic headwinds, and pandemics. The organization must evaluate the likelihood and potential impact of risks, develop effective mitigation plans, and continuously monitor and respond to disruptions.
Supplier Vetting and Collaboration Are Key
Central to the risk management plan is supplier vetting. When assessing suppliers, price cannot be a primary factor. The focus must be on product quality and the long-term health of each supplier’s business, demonstrated through their Good Manufacturing Practices (GMPs), worker health and safety, environmental stewardship, business governance, continuous improvement, future planning, and overall financial strength.
Suppliers should be required to complete detailed questionnaires, and then be audited in person, to ensure the paperwork is consistent with what’s happening on the ground. Supplier performance metrics –for example, to assess factors such as on-time-in-full (OTIF) deliveries– facilitate ongoing supplier evaluation and efficient resource utilization. This is true not just for upstream suppliers, but for downstream partners as well. Tracking OTIF metrics for outbound shipments guarantees timely deliveries and excellent customer service through the last mile. Preference should be given to logistics partners that hold a Good Distribution Practices (GDP) certification, to ensure product integrity during transportation, increase efficiency, and reduce waste.
The approach to supplier management should not just be focused on evaluation, however; it should also be collaborative. A proactive CDMO nurtures strong relationships with suppliers, engaging in open communication to build trust and working closely with them to help mitigate risks and disruptions.
That collaborative approach should also extend to industry partners. Sharing best practices and participating in industry forums strengthens networks and creates new connections. These initiatives help the organization remain informed about emerging risks and trends within the supply chain.
A Diversified Supplier Base Increases Security
De-risking the supply chain also requires diversification, to avoid over-reliance on a small pool of suppliers or any single country. Geographical risk reduction requires checking indirect dependence, too. If suppliers in India require key raw materials from China, for example, switching to those Indian companies does not significantly reduce risk as they are dependent on another source. A CDMO should map out its entire network to the last raw material, balancing the supply chain as needed. Qualifying and engaging domestic suppliers can also shorten the supply chain while lessening exposure to potential geopolitical disruptions.
When it’s not possible to find an alternative supplier for a given material, a CDMO can benefit from acquiring the manufacturing technology or know-how and transferring it to a new provider. That extra effort and investment will pay off in the long run.
Long-Term Forecasting Must Be Paired with a Short-Term Rolling Plan
Strategic forecasting provides value only when continuously refreshed and integrated with a dynamic operational framework. In addition to following market data, the organization’s leaders need to be in constant communication with both customers and suppliers, to closely monitor market trends, forecast the availability of key inputs, and identify potential risks. This information can then be leveraged in updated monthly forecasts, to create a rolling plan that is always current. The forecast is not static; it is a live, breathing plan that is continuously changing.
The Rolling Plan Must Be Integrated into the Operational Strategy
For the rolling monthly forecast to have a real impact on supply chain resilience, it must be connected to all systems across the company. If a demand forecast changes, all affected systems must respond. Planning for raw materials, production schedules, scale-up, staffing, and shipping must all be updated.
The effect of this integration is truly seen when an unexpected change arises. Imagine a situation where a customer signs a contract for 5 tons of product, then raises that demand to 15 tons. In an agile CDMO, this scenario triggers a change control process. With the help of technology as well as operational structures, the increase from 5 to 15 tons cascades quickly throughout the organization. From sales, it is communicated to manufacturing. Manufacturing recalculates capacity and raw material requirements, which are automatically updated in the ERP system. The production management team shares the new plan with suppliers, asking them to provide revised quotations, supply timelines, and shipping route confirmations. That information is passed on to the finance department, which updates working capital requirements. Profit and loss statements are revised, and HR responds to recalculated staffing needs. A truly agile CDMO organization can adapt to a new scenario like the above in a matter of weeks.
Agility Builds Resilience
The scenario described above illustrates the fundamental relationship between agility and supply chain strength. The entire CDMO operation must be flexible, ready to adapt at all times.
Agility is not very common among CDMOs. Most CDMOs sell capacity and lock in their plans. If they’ve allocated 100 tons of capacity for a customer, they expect to be paid for that capacity – regardless of changing needs after the purchase order is signed, often charging extra for adjustments. While these CDMOs may talk about supply chain resilience, their rigid structures undermine true adaptability. There is no resilience in a rigid organization.
The agile system described above enables a CDMO to respond to changes in demand, even significant increases. It enables the CDMO to be truly responsive to customer needs.
Building this level of agility requires years of discipline, welldesigned structures, refined processes, and strategic technology investments. It requires robust risk management, and the effort to truly de-risk the supply chain through appropriate diversification. A collaborative approach to working with suppliers, along with ongoing communication with customers and colleagues, is also crucial. Ultimately, it is operational agility that creates true supply chain resilience.
Conclusion: Supply Chain Resilience Requires a Comprehensive Strategy
For pharmaceutical CDMOs, establishing supply chain resilience has become imperative, to thrive, serve their customers, and ensure delivery of critical medicines.
To achieve supply chain resilience, a comprehensive strategy is required. Robust risk management is a foundational element, involving an in-depth assessment of threats and a well-considered mitigation plan. Proper vetting and metrics ensure that suppliers meet and maintain high standards and have a sustainable business. Those assessments should not stand on their own, however; they should go hand-in-hand with open dialogue and collaboration, to help suppliers develop strong systems that can withstand disruptions. Careful supply chain mapping is also essential, to avoid over-reliance on a small pool of providers or a narrow geography.
While these risk management principles are widely acknowledged across the pharmaceutical industry, many CDMOs fail to recognize that true supply chain resilience demands a more comprehensive approach. Beyond risk management, CDMOs must integrate forward-looking planning with real-time monitoring and a nimble operation. Systems must be in place to enable critical updates, such as changes in customer demand, to cascade through all aspects of the organization, from production scheduling and raw material management through HR and finance. Such responsive frameworks depend on both advanced technology solutions and appropriate organizational design, overseen by personnel committed to flexible execution.
Ultimately, effective supply chain resilience hinges on the integration of forward planning, comprehensive risk assessment frameworks, and above all, the capacity for a nimble operational response to changing conditions. True supply chain resilience creates a secure operation that increases operational efficiency, strengthens client trust, and ensures market stability.
Author Details
Davuluri Sucheth Rao, Vice-Chairman and Chief Executive Officer, Neuland Labs
Davuluri Sucheth Rao is the Vice Chairman and CEO of Neuland Labs, a manufacturer of active pharmaceutical ingredients. As part of the founding family, he focuses on driving quality and sustainable growth to deliver lasting financial and societal impact. Sucheth holds a degree in Mechanical Engineering and an MBA from the University of Notre Dame. A Six Sigma Black Belt, he applies operational excellence to strengthen Neuland’s market position. He is also an executive member of YPO, Hyderabad Chapter.
Publication Details
This article appeared in Pharmaceutical Outsourcing:Vol. 26, No.2 Apr/May/June 2025Pages: 10-12