Supply Chain Management in a Highly Regulated Environment – a Case Study of Supplier GMP-Compliance Management in the Pharmaceutical Industry
School of Business | Master's thesis
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Management and International Business (MIB)
AbstractThe purpose if thus study is to explore the impacts of high authority regulation and enforcement to supply chain management practices. As one of the most regulated industries, the pharmaceutical industry was chosen as the research context. More specifically, this study concentrates on the pro-cess of managing supplier’s compliance to guidelines imposed by the European Commission, com-monly called as the Good Manufacturing Practice (GMP). The research context provides a prominent ground for researching the main effects of rigorous authority supervision that may have significant impacts to both business and society. Theoretical part of this study concentrates on the relevant literature on supply chain management, supplier management, supply chain risk management and supply chain sustainability management. This literature review serves as a theoretical framework to understand what are prevalent, or normal, processes and assumptions in these different practices. This understanding is important for identify-ing the anomalies brought by high authority regulation and enforcement. The research was conducted by interviewing informants from six different pharmaceutical compa-nies on their personal perceptions and company’s processes. All the informants had a major role in their company’s supplier GMP-compliance process, thus having significant internal knowledge. A general framework on the supplier GMP-compliance management process is proposed based on the findings. I conclude that rigorous authority regulation and enforcement has several major impacts on how companies manage their suppliers, including disintegration of sub-processes, creation of depart-mental silos and shifting focus towards compliance itself rather than efficiency or rationality of the process. Furthermore, regulations limit risk management options that companies can exercise, which can lead to severe supply chain disruptions. Finally, through authority enforcement and certi-fication programs, there is an unintentional shift of responsibility from industry towards the authorities. Contributions of this study reach beyond expanding theory – the balance between industrial inter-nal self-control and need of regulatory interference and supervision is in headlines now perhaps more than ever before, not least because of the rise of sustainability initiatives. While adding regula-tion may at first seem as straight-forward approach, it has implications that are critical to recognize before imposing new requirements.
Thesis advisorGranqvist, Nina
supply chain management, supplier management, compliance, authority enforcement, risk management, sustainable supply chain management, good manufacturing practice, pharmaceutical industry