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Tom Middleton


Effective Supplier Integration for FDA- and ISO-Compliant Quality Systems

It’s all about transparency, accountability, and efficiency

Published: Thursday, May 17, 2018 - 12:02

Markets and manufacturing practices continue to evolve, and companies now outsource to an increasing number of global manufacturing and supply partners. As companies have pursued this broadened supply chain strategy, the ability to manage both business and quality risks has become more challenging. Working with external suppliers, companies lack the quality management accountability and capabilities found internally, and therefore are often faced with manual or ad hoc communication constraints that can lead to miscommunication, delays, and, ultimately, product issues in the market.

Due to increased pressure from regulatory bodies holding corporations responsible for supplier quality in documents such as the Food Safety Modernization Act (FSMA), various ISO standards, and other government and industry regulations, manufacturers must have a complete picture and strengthen oversight of supply chain activities and stay vigilant for any supplier quality issues before they result in an adverse event, or worse, market corrections or recalls.

The simplest way to describe a supply chain is getting things from one place to another. But anyone in business knows there are many things that happen, and can go wrong, with what can appear to be simple process. The supply chain process becomes far more complex and difficult to monitor when one considers all the sources of risk, and the corresponding implications for quality, that make the supply chain susceptible on a day-to-day basis.

It is estimated that manufacturers spend an average 50–80 percent of total product cost on raw materials and parts procured from multiple suppliers across different parts of the globe. To continually manage costs and improve performance, a company must be able to not only select the right supply chain partner, but more importantly monitor and proactively manage quality and risk in the supply chain. By failing to establish more comprehensive supply chain quality programs, companies are exposing themselves to large-scale quality issues, service deficiencies, and increased costs that can affect profits, doing damage to brands as well as to reputations.

One way to effectively oversee this process is to establish an effective and efficient approach to supplier quality management (SQM). SQM programs help manage business and product risks associated with outsourcing activities, and ensur compliance to the requirements mandated by FDA and other regulatory bodies. An effective supplier management process allows companies to approach supplier management using a risk- and performance-based approach, covering all of an organization’s suppliers, contractors, and consultants. Using an ISO- and FDA-compliant workflow, manufacturers can avoid the traps, pitfalls, and false sense of security created by developing and managing approved supplier lists, and instead focus on identifying, evaluating, and selecting external providers based on a demonstrated ability to provide products and services that satisfy requirements. This phased approach, when paired with well-defined process steps, can significantly enhance an organization’s level of compliance and reward its efforts to manage the supply base.

The phased approach mentioned above involves four main stages: identification/evaluation, selection, monitoring, and re-evaluation. This sets the stage for a dynamic and compliant approach to managing quality in the supply base. The identification/evaluation phase develops a supplier risk profile (related business and product risks) and defines the requirements a supplier must satisfy through the creation of industry specific service-level and quality agreements.

Once the identification/evaluation stage is complete, risks are understood and quantified, acceptability is determined, and an informed decision can be made about who you want to do business with. At this point, the selection stage can begin.

This is where the manufacturer selects the provider. The manufacturer can then issue a purchase order or, depending on the type of provider, a statement of work with them. Immediately following the selection phase, the manufacturer starts monitoring provider performance for quality, on-time delivery, and predictable costs. This is the monitoring stage.

As the relationship with the supplier continues and strengthens over time, standards and regulations also require periodic re-evaluation. Another name for the monitored and re-evaluation stage is the “WYN-WYN Zone," meaning, “What you need, when you need it.” This is where a provider wants to “live” throughout the relationship with a customer, and it is a critical and rewarding stage of the relationship.

FDA and ISO standards both contain requirements to maintain records of acceptable suppliers, contractors, and consultants. The WYN-WYN zone does exactly this. It is important, however, to keep in mind that the WYN-WYN Zone is not a “zone of perfection.” A manufacturer may still experience problems with a supplier while in the WYN-WYN Zone. Throughout the cycle, it’s almost unavoidable that problems will be encountered. Providers can experience underperforming, troubled, or even distressed conditions and related events during the course of a supply relationship. Depending on the type and extent of an issue, it may be time for preventive or corrective action.

It is at these times that we work with suppliers, contractors, and consultants to solve problems and get things back on track. Sometimes this might require extraordinary efforts on the part of our organization or the supplier’s organization, depending on any number of factors. But as long as you can determine, using your own business rules, that a supplier is demonstrating the ability to provide products that satisfy requirements, tools such as preventive and corrective action(s) will fit the bill.

If a provider is underperforming (that is, their key performance indicators, or KPIs, are trending in unfavorable directions), the proposed remediation is to initiate preventive action to get the KPIs back into target performance. The external provider status is still maintained pending satisfactory outcomes and closure of the issue(s).

If a provider becomes troubled or distressed (KPI monitoring or other controls are breaching agreed-upon targets), the proposed remediation is corrective action and may include unscheduled re-evaluation depending on the severity of the condition. External provider status is maintained pending effectiveness verification and closure of the event(s). If you’re wondering how to best define the criteria for underperforming, troubled, or distressed providers, well, that’s a matter for your organization to determine. You are uniquely equipped to determine these criteria in the context of your own environment and industry vertical.

But we all have our limitations, right? There are times when an external provider either intentionally or unintentionally demonstrates an inability to meet specified requirements. When this happens, termination may be the only solution.

The inability of a supplier to meet agreement requirements means it’s time to remove that supplier.

The value of a centralized supplier quality management system such as this enables transparency and accountability across your supply chain, reducing operational costs and improving efficiencies associated with evaluating, selecting, and monitoring your suppliers.

To learn more, join me and Quality Digest’s editor in chief Dirk Dusharme for the webinar, “Effective Supplier Integration for FDA- and ISO-Compliant Quality Systems,” on Tues., May 22, 2018, at 11 a.m. Pacific, 2 p.m. Eastern. Register here.


About The Author

Tom Middleton’s picture

Tom Middleton

Tom Middleton is a solutions architect for Sparta Systems Inc. Formerly an ASQ/RAB-accredited lead auditor for Underwriter’s Laboratories and Bausch + Lomb’s surgical division, Middleton has conducted nearly 1,000 registration, surveillance, internal, and supplier audits. Currently he is an ASQ-certified biomedical auditor. Middleton’s experience includes auditing of compliance to good manufacturing practices, international standards, and regulations for automotive, life science, medical device, and the consumer product vertical sectors, including: ISO 9001, ISO 13485, ISO 14000, FDA 21 CFR 820, Japanese Pharmaceutical Affairs Law (JPAL), Canadian Medical Devices Conformity Assessment System (CMDCAS), EU Medical Device Directive (MDD), and the Brazilian ANVISA standards.