Finding the Balance in Managing the Quality and Efficiency of the Supply Chain

November 1, 2009
Mike Jovanis

Volume 22, Issue 11

An enterprise-wide quality management initiative is required to maintain supplier quality without sacrificing bottom-line objectives.

Biotech and pharmaceutical manufacturing has for years witnessed and experienced the struggle between two opposing forces—supply chain efficiency and supply quality. This is often characterized by the disconnect between C-level executives, concerned with boosting the bottom line by an efficient product lifecycle, and quality managers, responsible for enforcing strict procedures and ensuring product quality. This doesn't imply that the C-level has been collectively negligent of product quality, or that quality managers are in no way concerned with the companies' overall financial performance. It simply means that the responsibilities and perspectives of these parties are often not in complete alignment, and between these parties, quality can easily take a backseat to production needs and profit.

Mike Jovanis

Ensuring that products are manufactured with the highest quality components and ingredients means keeping tabs on which suppliers offer the most consistent level of high-quality raw materials, and prioritizing future procurement from these suppliers accordingly. This requires tracking and management of supplier qualifications, audits, nonconformance, corrective actions, and other processes. As companies continue to rely both on outsourcing and internal manufacturing operations as crucial elements of the global supply chain, they also realize that incorporating processes for managing the supplier quality into their overall quality management systems is required to reduce risk and decrease costs.

CURRENT CHALLENGES TO MANAGING SUPPLY QUALITY

To better understand the critical need for managing supply quality as part of a broader quality management system, it is necessary to examine where things stand currently. There are several challenges that companies face when implementing an effective process for managing supply quality.

Inefficient, Decentralized Reporting

Biotech and pharmaceutical companies must conduct intensive audits of myriad suppliers and write detailed reports of their suppliers' operations. Yet, even some of the largest organizations have failed to implement a centralized system for tracking these relationships; instead they rely on rudimentary methods such as Excel spreadsheets or paper-based documentation to track these issues. Only by implementing a centralized system for comprehensive tracking of supplier data can organizations streamline their reporting efforts and realize the benefits of a more efficient and compliant process.

Lack of C-Level Involvement in Managing Supply Quality

Executives at biotech and pharmaceutical organizations, both large and small, generally are responsible for overseeing multiple facets of their company's global operations. Supply quality, therefore, often is left to departments that lack data about the direct correlation between supply quality management and the company's ability to grow revenues. Executives must play a more active role in ensuring that supplier relationships are effectively maintained and that the correct procedures are in place for gauging supply quality and evaluating processes.

Lack of Risk-Based Analysis for Supplier Quality

Companies must deploy comprehensive tools for analyzing and grading suppliers based on the level of risk they pose for the greater manufacturing operation. Without a risk-based solution, too much valuable time and too many resources are allocated to assessing the risk of reliable suppliers that pose no threat to the larger operation, although the more suspicious suppliers are less scrutinized than they should realistically be.

Increased Global Pressures

Companies face extreme challenges managing increasingly global supply chains. In 2008, supply quality related problems reached a boiling point with multiple deaths resulting from tainted heparin, which stemmed from China-based supply quality problems. Between holding companies and distributors, determining the true material suppliers and managing global supply chains has never been more challenging.

Biotech and pharmaceutical organizations must establish practices for handling supplier audits, ensuring organizational efficiency, and supply quality, while driving profitability.

BALANCING INTERNAL PROCESSES AND THIRD-PARTY PROVIDERS

The biotech and pharmaceutical industries depend on both internal manufacturing and compliance processes as well as third-party suppliers. Between these intertwined parties, it's critical for companies to find a way to hold themselves and their suppliers to stringent standards for quality and compliance while driving supply chain efficiencies and profits rather than impeding them.

Companies must take a proactive approach and increase visibility into potential supplier problems by obtaining a global view of all quality issues and supplier scorecards. This has far-reaching benefits, as it 1) ensures compliance with industry regulations, good manufacturing practices (GMPs), and ISO standards; 2) eliminates high costs related to scrap, rework, and delays caused by supplier quality problems; and 3) anticipates and eliminates repeat problems by improving supplier investigation and root cause analysis processes.

Although implementing a holistic program can require significant upfront resources, including system and infrastructure investments, training costs, and implementation time, the end gain is worth more than the initial outlay. With an enterprise-wide quality management program, companies also can improve quality trending and management reporting by integrating purchasing and inventory systems with the quality management system.

CRITICAL COMPONENTS FOR SUPPLIER QUALITY MANAGEMENT

An enterprise-wide centralized process must encompass myriad quality management and compliance components, including:

  • Supplier qualification: Manage qualification and approvals of new suppliers, including all necessary qualification steps, which may vary based on the supplier's risk assessment, and may include tasks such as self-assessment and onsite audit.

  • Supplier audits: Handle audits based on the risk level, audit frequency, and the supplier rating or score established in a supplier's profile. When a trend in supplier quality problems is identified, companies must schedule ad-hoc supplier audits. The audit process, related audit findings, and subsequent supplier corrective and preventive actions must be managed and tracked to ensure quick and effective resolution.

  • Incoming material inspections: Create inspection records when materials are received to ensure tracking of all inspection activities, including inspection type, received date, material information, quantity, inspection results, and related information.

  • Approved supplier lists and scorecards: Enable the organization to maintain and monitor approved or preferred supplier lists. Approved supplier lists can be customized reports or online databases that can be reviewed and updated by qualified staff.

  • Supplier nonconformance: Directly generate nonconforming material reports (NCMRs) from the inspection record or independently within the manufacturing operation when the materials are below quality control standards. Guarantee that the supplier investigations and root cause analyses are tracked through completion.

  • Supplier CAPAs: Track all supplier corrective and preventive actions (CAPAs) through completion. Provide third-party suppliers with secure access to view only their specific NCMRs, and audit findings and record corresponding corrective actions.

  • Supplier documentation: Maintain or link to documentation of important specifications, including inspection plans, delivery windows, and acceptance sampling for received items.

CONCLUSIONS

Managing supply quality effectively serves not only to drive compliance, but also to reduce the cost of poor quality, which, with both tangible and intangible ramifications (costs of product recalls, tarnished reputations or brand image), can ultimately be a detriment to any biotech or pharmaceutical organization. Without a stringent, holistic, and centralized supply quality management initiative that drives numerous supply chain and organizational efficiencies, companies' bottom-line objectives will be undermined, eroding any previous organizational successes.

Mike Jovanis is the vice president of product management at Sparta Systems, Holmdel, NJ, 732.203.0400, mike.jovanis@sparta-systems.com