5 Tips for Conducting a Supplier Audit

May 18, 2017
To ensure that a supplier can provide the material or products meeting quality specifications and requirements, consider these five things when conducting an onsite supplier audit

For pharmaceutical manufacturers, there are primarily two reasons to conduct a supplier audit: the quality management system (QMS) requires it, or there’s a problem.

Typically, critical suppliers are audited on an annual basis, while suppliers with poor quality metrics are audited more frequently. Whether they’re routine or for cause, supplier audits offer manufacturers greater visibility into whether a supplier’s products, processes or management system adhere to a defined quality standard. Absent a solid understanding of a supplier’s quality-related activities, manufacturers will struggle to know if the supplier’s quality system is unstable.

Conducting supplier audits is an essential and well-established tool for identifying, eliminating and preventing quality problems in a supplier’s products, processes or management system before the problems spread. Still, there are ways to improve supplier audits.
To ensure that a supplier can provide the material or products meeting quality specifications and requirements, here are five tips for pharmaceutical manufacturers to consider when conducting an onsite supplier audit.

In preparation for an audit, your audit team should review both parties’ expectations and responsibilities as laid out in the quality agreement. Additional areas of research should include: past audit reports, company history using the supplier’s product, current product specification, importance of the product to the company, whether the product has ever failed, alternative manufacturers qualified, and interviews with in-house personnel about the supplier and the product.

To make the most of the time allotted for an onsite audit, prepare by having a prioritized checklist of items to review based on the material, component or service supplied. There are many possible criteria that manufacturers may measure in a supplier’s quality performance and related activities, including: deviations and non-conformances, regulatory certifications, corrective actions, change controls, return rates, raw material chain of custody, batching process and production records, and complaint history.

Before setting foot on the audit site, you should determine where you will begin the inspection. Common entry points include customer complaints and manufacturing documentation, searching production history records for out-of-sequence processing, missing documents or deviations. Less common ways to start an audit include looking at the past five lots as a means of formulating trends and by reviewing final testing and inspection processes/tolerances in the supplier’s product lot release.

Beyond the typically prescribed audit-preparation tasks, the audit team should probe the supplier’s active and passive digital footprint, including social media channels and online reviews.

A good place to start is the supplier’s own website and social media profiles. What customer and/or product reviews does the company highlight on its website? What do other customers, both past and present, say about the company and its offerings? Have the company and its products been rated or reviewed by Consumer Reports, CNET, ConsumerSearch.com or the Better Business Bureau?

It may also be worthwhile to consider how the supplier treats its own personnel, which can say a lot about how the company approaches quality. For example, a revolving door of employees in quality or manufacturing departments can be indicative of serious problems with the supplier’s goods, services, processes or overall business. Prior to an audit, it’s good to investigate the supplier’s profiles on Glassdoor, Indeed and Vault, which offer employment-related information such as company reviews, CEO approval ratings, employee salaries and more.

Finally, the audit team should search the U.S. Food and Drug Administration (FDA) website’s publicly available resources for information relevant to suppliers’ compliance with CGMP regulations, including whether a supplier is the subject of an FDA warning letter, import alert or recall.

Customer complaints, while common inspection targets, should not be taken for granted.

During an audit, it’s important that you ask to see the customer complaints on products you currently purchase from the supplier. Customer complaints are an important source of information about the performance and quality of products under actual usage. They are especially critical in pharmaceutical manufacturing and other life science industries, where complaints may indicate serious safety issues. In both FDA and ISO environments, effective handling of complaints is considered an essential part of the quality system - and a critical factor in ensuring compliance. Quick and efficient complaint handling can reduce shipments of nonconforming products.

Capturing and investigating issues received through this channel is important. In this area, the audit team should look for repetitiveness to determine whether other clients have had similar complaints about not only the product you currently purchase, but also the supplier’s product line outside of your current purchases.

If, during the audit, evidence in customer complaints shows that the supplier has an issue, that evidence will be found through paperwork. For example, paperwork can reveal product failures or recurrence of missed ship dates. A pattern of missing ship dates often indicates a failing manufacturing process is affecting the supplier’s quality.

As companies add more vendors, materials and components to their business, maintaining visibility throughout the supply chain becomes more challenging. A supplier having its own suppliers adds another level that blurs visibility in a supplier’s activities.

Before and during supplier audits, you should review the chain of custody documents. If a supplier is outsourcing parts of its process, it’s important that you are notified of that fact and that you ensure the supplier has quality agreements with organizations from which the supplier sources. You must know whether a subcontractor is in harmony with their controls and must be sure that the primary contractor has controls in place to deal with its own vendors. Having proper controls in place minimizes the likelihood of a product or part that shouldn’t be accepted finding its way through the process.

In general, suppliers should be willing to reveal their subcontractors and how those relationships could affect a customer’s business. If a supplier allows it, you should review the supplier’s audit findings of its own suppliers; if the supplier doesn’t allow it, then you should ask to see the supplier’s incoming inspection of subcontracted materials, as well as any other documentation that will prove the supplier is holding its vendors to quality standards and receiving quality items.

Knowing the right questions to ask is a powerful component during an audit, and as such, the auditor shouldn’t be afraid to ask bold and even uncomfortable questions during an audit. Such questions might be: “What’s your worst deviation this year?” “Can you show me a failure and how you fixed it?” “What aren’t you showing me?”

The supplier should feel that, despite the uncomfortable questions or observations, you’re there to help to identify process, training or documentation issues affecting the supplier’s quality metrics and help guide the supplier to an improved state of quality.

Not every auditee may be forthcoming and transparent. If it seems like a supplier is being evasive during an audit, they probably are. If the supplier is not providing clear answers or certain quality-related documents, it may be a deliberate attempt to hide quality issues. If the supplier is aggressively leading you down certain paths during a tour, they may be trying to divert your attention from process problems like deviations, out-of-specification or failed lots.

Remember that, when it comes to conducting audits, you’re working with people and not just assessing processes and documents. While it’s important to review these things during an audit, it’s equally important to actively listen to the supplier, read and understand situations, and stay focused on achieving objectives.

Terrance Holbrook is a senior product manager at MasterControl. He has 20 years of industry experience in manufacturing fields, is a certified Six Sigma Black Belt and ISO 9001:2008 lead auditor and is also certified in lean manufacturing and total quality management. A member of the Project Management Institute, Holbrook holds a bachelor’s degree in business administration and an MBA with a concentration in international business.

About the Author

Terrance Holbrook | Senior Product Manager