Many hands and companies touch the materials required to get a finished product to market. With the growth of supplier networks and contract suppliers, much of the quality process is out of the manufacturer’s control. If materials shipped from any vendor aren’t up to spec and a faulty product reaches the market, the negative results can directly affect the contracting company’s brand and bottom line. However, there’s a way to manage supplier relationships that is beneficial and efficient for both parties, and that’s through supplier audits.
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Discovering the root cause of a supply problem is difficult given the number of suppliers and geography involved in a typical supply chain. Recent statistics show that 52 percent of product recalls across all industries are due to supplier and contract manufacturer issues, and the percentage may be even higher in the pharmaceutical industry. Although many manufacturers have quality agreements with their vendors, it’s the contracting company that’s ultimately held liable for mistakes.
The ideal, of course, would be for manufacturers to conduct external audits of all their suppliers to ensure that only quality materials are sent through the supply chain. However, this could take a considerable amount of time, not to mention money, if a product requires materials from many different suppliers. Therefore, manufacturers should assess the risks to their product that could be introduced by individual suppliers in the network, and schedule audits accordingly. For example, a manufacturer might send quality auditors to a supplier making a key product, while a low-risk component might be audited with questionnaires and a site visit scheduled every few years.
Vendors supplying a component face a related problem. They can easily become overloaded by audits, especially if they supply materials for many companies that make different products. Manufacturers may impose a regular audit date, and they can perform on-site audits. Some manufacturers have multiple audit teams to inspect different aspects of a supplier’s business, adding to the number of audits required. Vendors might not have the time or resources to satisfy all their partners’ audit time frames and still maintain a reasonable production schedule.
Share data between audit groups
To maximize relationships and guarantee that shipped materials are of the highest quality, an automated audit management system should be implemented. An enterprisewide auditing system allows the different auditing groups to share data about the supplier and coordinate audits. This creates efficiencies and cost savings for both manufacturers and vendors. An automated system also provides a consistent form of feedback and traceability, allowing the manufacturer to quickly determine which vendors they want to work with. Timely reports ensure that quality agreements are being kept.
Within an automated system, manufacturers and vendors first agree on a standardized template that includes all key metrics to evaluate the supplier’s quality processes and ensures that materials shipped meet the requirements of each manufacturer. This agreement should be part of the quality agreement between the two companies.
Depending on the company’s maturity level, it’s imperative that it first audit its own internal systems. When gaps have been identified, they can be addressed properly and fixed. When negative trends are discovered, the manufacturer should perform audits with the supplier identified by the system.
A supplier quality management system increases the efficiency of selecting suppliers and managing the qualification and approval process. Such a system avoids redundant evaluations by maintaining complete records of all previous suppliers evaluated for reference across the enterprise. Supplier qualification is further enhanced by advanced auditing capabilities that allow offline updating of audit records and reports, and seamless integration back into the quality management system.
Manage the life cycle of supplier relationships
Sophisticated companies include supplier auditing as part of a comprehensive enterprise quality management system (EQMS). This system can help manage the life cycle of supplier relationships, including regular audits and quality-related activities such as deviations and nonconformances, change controls, and supplier corrective actions.
Often, supplier quality management is limited to supplier management and procurement solutions that focus on a variety of metrics to ascertain the suitability of suppliers, including benchmarks, supplier scorecards, and analytic packages. Supply-chain solutions are also used jointly with enterprise resource planning (ERP) and materials management to track and complete purchase orders, aggregate purchases, verify on-time delivery, and find the lowest-cost suppliers.
A supplier quality management solution must allow users to add new suppliers and contract manufacturers. To participate, suppliers and contract manufacturers must be able to register as new participants in the extended quality management system. The core system should be able to track supplier information, including email addresses, users names, and other identity information. During the on-boarding process, the manufacturer must be able to collect the necessary documentation to include the supplier in the extended quality network.
Using a cloud-based solution, such as Stratas from Sparta Systems, manufacturers can include their contractors and manufacturers in their EQMS without giving them permission to work within the corporate system behind the company’s firewall. Companies can send audit findings to suppliers and have them create CAPAs to remediate those findings. The manufacturer has visibility into the actions a supplier is taking to remedy issues and can measure effectiveness. This creates a closed loop from supplier qualification, scoring, audits, and findings to the actions taken by the supplier.
A comprehensive EQMS with integrated supplier qualification and auditing is the key to managing quality issues across a complex supply chain. It allows executives to trust that the products their companies are marketing are safe and effective, while creating measurable efficiencies that save time, money, and resources.
To learn more, attend the upcoming webinar, Using Enterprise Quality Management to Optimize the Supply Chain, on Jan. 27, 2015, at 2 p.m. Eastern/11 a.m. Pacific, sponsored by Sparta Systems and Quality Digest.
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