Supplier Audits -- Do's and Don'ts: Managing Supplier Quality & Reliability

By implementing supplier audits collaboratively and applying robust quality management tools, manufacturers are much more likely to achieve supplier quality success

By Terrance Holbrook, Senior Technical Product Manager, MasterControl

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Pharmaceutical manufacturers encounter an ever-growing list of pressures in the face of an increasingly complex global supply chain. Chief among the challenges is managing the operational difficulties of working with any number of specialized suppliers contributing critical ingredients and components to drug production. Add to this the need to meet strict quality and compliance requirements set by various regulatory agencies throughout the world, and it’s clear that the supply chain creates an environment that is difficult for pharma manufacturers to manage and control.

Even when there are quality agreements between manufacturers and their suppliers, it’s the manufacturer that bears the responsibility of managing its supply chain adequately. As the supply chain grows longer and more complex, meticulous supplier quality management has become essential for manufacturers to ensure they are sourcing quality materials to create their products.

To that end, manufacturers must develop a deeper understanding of the quality and reliability of their suppliers, and quality excellence must extend to suppliers.

VISIBILITY: A KEY PAIN IN THE PHARMA SUPPLY CHAIN

Managing supplier quality in the pharmaceutical manufacturing industry can be difficult even for the most quality-centric organization. In a recent survey of more than 500 senior leaders across industries, when asked about their top quality-related challenges, respondents from all life sciences industries emphasized the inability to measure quality metrics effectively and problems posed by disparate systems and data sources. Pharmaceutical manufacturing companies, in particular, cited considerable challenges with visibility into supplier quality, according to LNS Research’s findings.

As the U.S. Food and Drug Administration (FDA) and other international regulatory bodies place more focus on upstream activities, pharmaceutical companies must gain greater visibility throughout their supply chain. Until a manufacturer can see the activity taking place among its suppliers and partners, it will struggle to know if a supplier’s quality system is failing.

In a field where precision is critical, even slight variations in equipment used, materials sourced or processes followed can quickly result in products out of specification, nonconforming materials and manufacturing/production downtime.
These risks highlight the need to establish a robust supplier audit program. Conducting supplier audits is essential to gaining visibility into whether a supplier’s products and processes adhere to a defined quality standard.

WHAT TO LOOK FOR DURING A SUPPLIER AUDIT
There is no one-size-fits-all way to conduct a supplier audit. That said, one of the most common supplier management issues facing manufacturers today is having vague quality requirements. Even as manufacturers expect suppliers to measure their own performance, manufacturers must also work with their suppliers to establish clear quality requirements for their suppliers, defining their own metrics and key performance indicators (KPIs) for the performance of their suppliers.

Every manufacturer must establish its own criteria for what requisite characteristics and capabilities its suppliers’ quality system must possess or demonstrate. Moreover, the breadth and depth of an audit may differ depending on the product or process. Among the endless possible criteria manufacturers can consider measuring are the following elements of a supplier’s quality performance and related activities:

• Deviations and non-conformances
• Regulatory certifications
• Corrective actions
• Change controls
• Complaint history
• Return rates
• Raw material chain of custody
• Batching process and production records

A criteria list can be long and comprehensive, which is why many manufacturers maintain an audit form or survey that outlines specific questions to help evaluate suppliers in an expansive scope.

Signs during an audit that a supplier’s quality performance is poor can include high scrap rates or nonconforming product rates; poor/incomplete batch record documentation; and below industry-standard KPIs. Manufacturers can use audit results to identify process, training or documentation issues that affect their supplier’s quality metrics, and then help steer the supplier to a higher state of quality.

HOW TO GUIDE A SUPPLIER TO AN IMPROVED STATE OF QUALITY
Once the issues hindering optimal supplier quality have been identified, the manufacturer and supplier can together identify corrective actions for the supplier to implement within a specific time frame. Supplier scorecards should be updated to reflect quality-related problems found during an audit, and because supplier quality management is a continuous process, it’s important to set up reoccurring supplier evaluations, or mini-audits, to identify, address and prevent quality problems.

To successfully implement supplier corrective actions, there needs to be a robust and well-managed process. The process should not be based on giving specific solutions to the supplier.

More often than not, the supplier is more familiar with its own quality system and has a better understanding of it than the manufacturer that is auditing it. Mandating specific solutions can actually cause more damage than benefit — overcomplicating an already-complicated quality system, adding more steps the supplier can’t follow and leading to more problems in the future.

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