I regard an alternative source of pharmaceutical material as an operating option with a continuing cost, not an item that becomes permanently complete when qualification is recorded. The distinction matters because resilience programmes are often measured by the number of suppliers added. A register can expand while the company's practical ability to change supply remains limited. The alternative may have no available capacity, its commercial terms may have lapsed or the people responsible may no longer understand the conditions under which it was approved. The entry survives longer than the capability.
Distinguish a name from a usable route
The first task is to define the dependency precisely. Saying that a product has one supplier may conceal several different exposures: a material, a manufacturing step, a transport route or a specialist service. Adding another commercial counterparty does not necessarily remove the underlying concentration. Two sources may depend on the same upstream facility or on capacity that becomes constrained at the same time. I ask procurement and technical colleagues to describe the actual route and its critical assumptions. This is a mapping exercise before it is a purchasing negotiation or an announcement about a broader supplier base.
Next comes the work that makes the alternative relevant to the intended product. That work varies and belongs with the responsible specialists. The CEO should not shorten it by declaring that diversification is strategically urgent. Management can provide resources, settle priorities and ensure the commercial case includes the necessary activity. It can also accept that some proposed alternatives will not become usable. A programme that assumes every candidate will succeed encourages people to report progress through milestones that are easier to complete than the underlying question. A signed agreement is visible; a satisfactory technical conclusion may take longer.
Our programme for eight hospital-product materials illustrates the distinction. Six alternative sources completed the required internal qualification work over two years. Two remained unresolved because of comparability questions. It would have been attractive to describe the programme as covering all eight, since each had an identified candidate and an active workstream. We reported six usable alternatives and two continuing dependencies. That wording mattered to inventory and supply planning. Those teams could not responsibly make the same assumptions about a completed option and a possibility still being investigated, however promising the latter appeared.
The six alternatives also increased annual cost by approximately ¥180 million. Part of that cost concerned materials and part concerned the activity needed to maintain the arrangements. A resilience argument should not imply that this expenditure is automatically justified in every case. Directors need to understand the dependency, the consequence being reduced and the limits of the option. Some products may warrant a different response, including inventory, capacity agreements or a change in the portfolio. The comparison should be specific enough to allow a decision, while acknowledging that the probability and duration of an interruption may remain uncertain.
Pay for the option after qualification
Once an alternative is available, commercial behaviour can quietly weaken it. Purchasing may direct almost all volume to the cheaper incumbent. The second source then has little reason to reserve attention or capacity, and internal teams lose familiarity with its practical requirements. The company continues paying some oversight cost while obtaining less of the intended benefit. I therefore want a maintenance plan: who owns the relationship, what level of activity keeps the route credible and which changes require the assumptions to be revisited. This is part of the original business case rather than administrative work added after approval.
There are sensible objections to maintaining activity with a higher-cost source. Dividing volume can reduce purchasing efficiency, increase planning complexity and introduce additional opportunities for error. An alternative is not inherently better because it is alternative. The executive task is to weigh these consequences against a defined dependency, with technical and quality advice retained throughout. I do not favour a universal rule that every material needs two sources. Some arrangements would create cost without useful flexibility. Others may be valuable even at low expected utilisation because the consequence of losing the sole route is particularly difficult to manage.
A useful review asks what would happen if the incumbent stopped supplying today. The answer should describe the actual sequence, not merely point to an approved supplier code. Which decisions would be needed? What material or capacity would be available? What work must occur before a change can support dispatch? The exercise may reveal that the option is slower than the supply plan assumes. That is valuable information even if no interruption occurs. It allows management to revise inventory, communication or the claimed level of protection before circumstances force the organisation to discover the gap in public.
Report the dependencies that remain
I also ask teams to distinguish evidence from reassurance in their board reporting. A statement that all critical suppliers have continuity plans tells directors little about the company's own dependencies. A more useful account identifies the selected routes, the options that have been exercised or reviewed and the assumptions that remain untested. It should show material changes since the last review. The board can then examine whether management is sustaining the capability it previously funded. This is different from expecting directors to inspect supplier technical files or substitute their judgement for the authorised quality process.
Another complication is the relationship with the incumbent. Diversification can be interpreted as a signal of dissatisfaction when the actual purpose is to reduce concentration. Commercial teams need to manage that relationship honestly and within the agreed terms. A company that relies on one source while treating it as easily replaceable may damage the cooperation needed during a disruption. I want procurement to explain the operating intention accurately, protect appropriate confidentiality and preserve constructive working relationships. Resilience depends partly on information and responsiveness, which can deteriorate long before a contract formally ends or a delivery is missed.
My view would change where maintaining an alternative introduces more complexity than the organisation can competently manage. In that situation, the answer may be to strengthen the existing route, simplify the product range or fund a different form of flexibility. The purpose is not to maximise the number of options on paper. It is to make a considered choice about which dependencies the company can reduce and which it must continue to manage. An honest account may therefore show fewer completed alternatives than the original programme promised, while giving directors a better basis for the next allocation.
The lasting benefit of a supply programme is a capability that remains usable after the project team has moved on. That requires ownership, periodic review, commercial attention and a willingness to pay for an option before it becomes urgently needed. It also requires restraint in describing what the option can achieve. Six alternatives are six specific routes with conditions, not a claim of uninterrupted supply. I would rather present that qualified operating record than a larger headline that leaves planners, directors and customers relying on flexibility the company has not actually maintained.