Improve CMO performance. For more flexibility and higher speed.

Why most CMO optimization projects fail
and
how you as a leader in the pharmaceutical industry still secure the results

  • Optimize CMO
  • Supply Chain & CMO
  • Accelerate projects
  • Supply Chain & CMO
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George Station Master

Why do so many CMO (Contract Manufacturing Organization) optimizations fail?

Many of these CDMO optimizations fail because:

  • No one truly feels responsible for the result (the execution is usually entrusted to various departments in parallel)
  • The implementation is not being pursued actively enough
  • The internal team and the payroll provider's team are not on the same page
  • Because the solutions being developed are too theoretical and not practically feasible

If the performance of your CDMO is not where it should be, you are surely already familiar with the symptoms:

  • The costs are too high
  • Delays in production and deliveries happen from time to time (but not always)
  • The production quality is sometimes „shaky“
  • Within the internal team, there is sometimes frustration about the collaboration

And in many companies, despite multiple attempts, there is no truly fundamental change.

That is not unusual!

In the pharmaceutical industry, CMO and CDMO optimizations do not fail because people do not know what needs to be done, but often because no one consistently takes care of implementation or is in a position to do so.

What is meant by CMO and CDMO optimization in pharma?

The optimization of contract manufacturers is usually about costs and cost structures. In addition, it is also about reliability, quality and delivery capability, as well as:

  • Communication structure
  • Certain defined Key Performance Indicators („KPIs“)
  • Operational improvements
  • Coordination between the internal team and the contract manufacturer

And of course, in addition, about GMP topics that affect both customers and suppliers.

Why this matters to you

If you are responsible for these areas:

  • Manufacturing and production or their performance measurement
  • Supply Chain Stability
  • CMO and CDMO Management / Third Party Management
  • Technology transfers

then such failures are not only of theoretical interest to them! If these improvement projects do not work, they usually have to deal with troubleshooting because this then leads to delays, budget overruns, and consequently internal pressure.

The real problem:
Not the strategy, but the execution!

Most organizations already understand:

  • Where the bottleneck is
  • Which suppliers have poorer performance
  • Where the costs are too high

The problem is not the understanding, but the implementation and execution under real GMP conditions.

Brief digression: even AI won't change that. It's not the written texts or presentations that are missing, it's the implementation in reality!

How do you improve CDMO management?

Primary cause: no clear responsibility

The optimization of contract manufacturers usually falls under the responsibility of various departments, such as:

  • QA
  • MSAT
  • Shopping
  • Production/Manufacturing

These various departments all handle specific aspects of the collaboration with the contract manufacturer. But responsibility remains fragmented and usually results in:

  • Slow decisions
  • Different priorities (each department usually has different annual goals)
  • Nobody bears overall responsibility

What works well according to our experience instead is:

  • An overall manager with the corresponding decision-making authority
  • Decision-making authority on all topics in cooperation with the contract manufacturer
  • Fast decisions thanks to this person with overall responsibility

important rule:

Without overall responsibility, there is no optimization, only coordination. Coordination alone produces no results.

The optimization of contract manufacturers usually falls under the responsibility of various departments, such as:

Cause number 2: a lot of strategy, but little implementation

Many initiatives miss their mark because they remain at a very theoretical level:

  • There are many analyses
  • Perhaps also workshops
  • And concept papers perhaps also in the form of complex SOPs

However, to achieve tangible improvements, it would require:

  • Real implementation under real GMP conditions
  • Actual changes in the process (administrative processes and production processes)

Cause-Effect-Solution

Cause: usually there is an external consulting firm behind it that focuses mainly on strategy

Impact: No change whatsoever in day-to-day operations

Solution: applied and practical implementation in the organization

 

Contract manufacturers improve through operational changes and not through PowerPoint presentations!

Reason number 3: there is a lack of real implementation
experience

Optimization for contract manufacturers requires mastering real-world challenges (and not just theoretical discussions)

  • Failed productions
  • Deviations
  • How do you achieve improvements under GMP? They are usually discovered shortly before or during validation.
  • production pressure, time pressure

Without practical experience:

Many initiatives miss their mark because they remain at a very theoretical level:

Many initiatives miss their mark because they remain at a very theoretical level:

  • Do the solutions remain unrealistic and stuck at a theoretical level
  • Does the implementation fail
  • Loss of team trust

Mini Case Study

A biotech startup is trying to improve the performance of its contract manufacturers through a global consulting firm:

Situation: unreliable deliveries, high deviations and delays

Actions: Strategy workshop and process design (textbook)

Result: no measurable improvement after six months

Only through pragmatic implementation together with the contract manufacturer:

  • Significantly fewer deviations
  • Significantly more reliable delivery times and dates
  • Implementation needs people who have done something like that before—not just consultants who perform analyses

Reason number 4: there is a lack of coordination between the internal teams and the contract manufacturer

why this vote is critical:

  • Contract manufacturer specific KPIs
  • Organization of cooperation between contract manufacturer and customer
  • Communication

Typical problem cases include, among others:

  • Unclear, shared KPIs
  • Inconsistent communication, as different departments are involved on both sides
  • There is a lack of concrete coordination among the various activities.

Often these problems result from this:

simple problems recur without being sustainably resolved

changes are happening very slowly or not at all

a high degree of frustration on both sides

 

What works against this, in our experience:

clearly agree on the goals in the form of KPIs (sounds completely trivial, but is often not done)

give the joint projects a fixed structure with fixed responsibilities

Define escalations and how to discuss and resolve them in advance

Cause number 5: over-complicated solutions

Why are pharmaceutical supply chains becoming unstable?

This complex of causes is very closely connected to the involvement of large consulting firms and often occurs together:

improvement initiatives often invent new tools and processes:

new reporting tools (always with an Excel pie chart!)

Additional processes

complex reporting processes with new metrics derived from many other metrics (making it very difficult to assess whether changes will have a positive or negative impact on these metrics)

what happens as a result:

  1. The team does not want to use these new tools and finds shortcuts or excuses

  1. The entire implementation is getting slower and slower

  1. Every change must be discussed again and again, over and over

what really works is:

  • Very simple, focused actions and implementation (please forget the 20th KPI – that won't get you anywhere)
  • Setting practical priorities that align with the workflow. So, not „we want more profit,“ but rather "we want to reduce our production costs by finding the root cause of our many batches and improving this process."
  • Practical solutions that can be implemented immediately (not a new complex AI tool that will be ready in two years, but a solution that works directly on the production line without IT)

Simplicity is the new currency! The simpler the better!

Many of these problems can be quickly stabilized if the operational bottlenecks are clearly identified.

Cause number 6: real workflow is ignored

Real workflows are only rarely the way they are on paper or depicted in a flowchart. Take the trouble to trace actual work packages as they are actually processed.

The problems often lie in the fact that:

  • real workflows are ignored and project participants orient themselves purely on SOPs
  • Often there are simply not enough resources to process procedures as prescribed (for example, obtaining all required approvals—approvals are simply „clicked through“ instead of actually being checked)
  • Production pressure and time pressure

The resulting threats are then:

  • Changes cannot be implemented at all
  • The team is falling back into its old process because the new process is barely feasible.

So the problem is:

  • A plan based on the theory of standard operating procedures (SOP)
  • Effect: the new process is simply not being implemented, or at least not sustainably.
  • Solution: Implementations must be based on current reality rather than a theoretical ideal state

Cause number 7: no return
notify participants

Cause number 7: not providing feedback to participants

The change process does not end with the publication of the document. This is only where it begins! It is often necessary to make changes after a few months. For this, it is important that all participants continue to be informed about the status and the implementation.

If the parties involved are not kept informed, it often happens that:

  • The others are losing trust
  • Perhaps the initiative will fizzle out
  • The project is losing priority and with it resources

What really works is:

Simple communications on how the applied improvement methods function and operate

Show progress

Prepare the participants from the very beginning for the fact that changes will be coming after a few months.

Cause number 8: weak management of the contract manufacturer

How to better control CMOs?

Many organizations lean back as soon as the associated documents and contracts are signed and published internally.

Many structures lack:

  1. Clear success goals that are understood in the exact same way by both sides

  2. Structured performance reviews that take place regularly (not just a mandatory year-end review)

  3. Active management of the supplier-customer relationship

Result if this is not done:

  • Recurring, similar problems
  • You are losing more and more control
  • What happens at the contract manufacturer is becoming increasingly difficult to predict

what works are:

  • Create a collaboration structure! Simple yet clear!
  • Track the performance of the contract manufacturer with clear metrics
  • Actively managing and proactively approaching the contract manufacturer; the CMO must also know what they really want (sounds trivial, but is very often lacking)

Cause number 9: no active risk
management

How do you reduce risks in pharmaceutical supply chains?

By that I don't mean a risk management document, but the consideration of what to actually do in the event of a problem.

The optimization of a supplier involves these three major risk areas:

How do you improve CDMO management?

  • Compliance risk
  • Risk in manufacturing and the order and delivery process
  • Risk of dependency

What happens often, but doesn't work:

  • The risk is identified but not actively addressed (it lies dormant in a risk analysis)
  • Since clear escalation paths are missing, problems „explode“ late.

What works instead:

  • Identify the risk
  • Active editing and improving
  • Monitor the risk and, if possible, predict under which circumstances a problem could occur

Many project failures happen due to risk problems rather than strategy problems

Successful CMOs and suppliers
Improvements can look like this

  • A clear structure for this collaboration has been established
  • Practical implementation
  • Experienced leaders of this collaboration on both sides
  • Simple solutions
  • Trust is good, but (sensible and simple) control is better

Important experiences from many projects

many failures result from poor execution rather than a flawed strategy

clear responsibility, that „taking care of things“ is probably the most important success factor

Strategy without an implementation plan and execution yields no results.

practical implementation beats theoretical consulting

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Dr Georg Astl

Dr Georg Astl is the founder of Eoswiss Pharma. He is the author of numerous specialized articles and a speaker at professional events.