OEMs that rigorously manage the quality of their suppliers’ products and services stand to benefit from improved supplier performance.

Michael Kuehne

March 1, 2007

12 Min Read
Managing Suppliers Drives Quality Performance

GUIDE TO OUTSOURCING

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In the highly competitive and changing environment for developing and launching new medical devices, manufacturers must rely on incorporating materials from a number of suppliers. Suppliers provide products and services that vary across a wide spectrum, from raw materials of various types, such as chemicals, plastics, and metals, to complex subassemblies used for creating final products. This includes stainless steel for stents, electronic components for pacemakers, and implantable devices made from human tissue and bone.

For all types of device OEMs, managing supplier quality is a critical factor for producing successful and effective medical devices. The diversity of materials used by manufacturers, along with the locations of their suppliers and the need for multiple sources of materials, make the process of supplier selection, qualification, and monitoring critical to success. Managing raw-material and incoming-component quality is critical for a successful device manufacturing process. The quality of incoming materials has a direct effect on final product quality and cost, and it influences the manufacturing process settings, inspection, and acceptance criteria.

The capabilities of suppliers and the level of supplier qualification can have significant consequences for manufacturers. Many factors can contribute to product quality, including design specifications and process capability, as well as product performance requirements. However, the ability to control and manage incoming materials affects all downstream processes related to product manufacture. For this reason, medical device manufacturers' management should receive reports on the effectiveness of the company's supplier quality management process. It is essential that the quality department employ a robust supplier quality management process. Such a process provides a framework for OEMs to manage their expectations. Documenting a supplier's quality process can include creating flowcharts with quality requirements, procedures, and metrics. This documentation can help OEMs communicate their expectations to suppliers, as well as help train external auditors to effectively assess supplier capabilities. The time spent developing supplier quality process documentation improves device manufacturer–supplier understanding, increases audit effectiveness, and facilitates supplier process improvements.

Supplier Quality Management Process

Device manufacturers vary in their ability to manage material suppliers. Not effectively managing suppliers may result in increased material variation, processing problems, and marginal product quality. A robust supplier management process enhances OEMs' capabilities to affect product materials and components that drive finished-product quality. A robust supplier quality management process can reduce material variation and support increased process yields, with fewer nonconforming products. It can also minimize the time required to address process deviations arising from material issues.

The supplier management process begins with the evaluation and selection of suppliers. Supplier selection and qualification may vary by device OEMs according to their own unique requirements. However, supplier quality may be improved by using a formal plan that includes certain steps.

Formal Evaluation of Supplier. Suppliers should be evaluated against requirements developed by an OEM to meet the business and manufacturing needs for producing reliable, quality devices. The requirements for evaluation are related to device design and functionality, which should be determined during product development and testing.

Ability to Meet Specified Requirements and Capabilities. Suppliers must be able to conform to a manufacturer's quality requirements. They must demonstrate that they have the capabilities to supply materials and components in a reliable manner with consistent quality. One way OEMs can determine whether their suppliers can meet their needs is through supplier audits. These audits can confirm supplier process capabilities, validation and qualification, and supplier procedures for controlling material variation. The audits provide information about whether a supplier is capable of providing materials and components of consistent quality. If audit results indicate the need for improvements, suppliers should initiate corrective actions when needed to address any audit observations.

Documented Evidence of Compliance. Suppliers must have processes in place that ensure conformance to an OEM's requirements and policies, and records that document conformance. OEMs can determine whether this is achieved by conducting detailed supplier audits, monitoring incoming material quality, and receiving periodic supplier reports (quarterly as a minimum) about the manufacturing process effectiveness. Examining suppliers' internal audit process is the most effective means of documenting conformance to manufacturers' requirements. A robust internal audit process must start with a manufacturer's specifications and requirements and provide sufficient review of records and policies to verify compliance.

Process Control Capabilities. Suppliers must have manufacturing processes that ensure consistency and quality for products supplied. Processes should be validated, and statistical control of critical process parameters affecting quality should occur. A Certificate of Analysis confirming adherence to specifications helps suppliers demonstrate control and significantly reduces the need for inspection.

Clear Specifications. OEMs should provide suppliers with mutually agreed upon specifications defining properties, requirements, test methods, and process controls needed to demonstrate adherence to details critical to performance.

Tolerances and Targets for Critical Process Parameters. Suppliers should identify critical parameters and establish tolerances and targets that demonstrate rigor in their processes. This should also be part of the periodic reports that suppliers send to manufacturers.

Ability to Minimize Risk. A supplier's ability to minimize risk to OEMs can be achieved through robust process controls and accurate records of production and acceptance activities. In addition, timely communication to manufacturers of deviations and effective corrective actions and process improvement initiatives also help. Minimizing risk can be driven by ongoing monitoring of process performance through yields, reject classification, and conformance to quality measures for the specific material or product provided to the device manufacturer.

Supply Agreements

Sidebar:

Supplier Management In Action

Following the selection of a supplier, formal agreements should be established that define the details of the OEM-supplier relationship. Integral to managing suppliers is the establishment of a quality agreement, a supply agreement specification (SAS), or a material or component specification, or some combination of the three agreements. A quality agreement must clearly identify the responsibilities of both the manufacturer and the supplier that relate to the supply and acceptance of incoming products, components, or materials.

An SAS is more detailed than a typical component or material specification. An SAS is used for the external manufacture of finished products or complex materials for which the control of change to the manufacturing process, the raw materials, and the finished product or subassembly is critical to product quality.

Both the OEM and the supplier must sign the SAS to indicate their agreement and acceptance of the requirements and terms stated. These specifications and agreements are the foundation for communication, monitoring, and approving changes between the supplier and manufacturer. Implementation of such a document drives change procedures and communication between the manufacturer and supplier.

An SAS differs from other supplier specifications in that it also includes a manufacturing process flowchart and tables describing the requirements and test methods for each critical control point identified in the process flow. It provides clear definitions of requirements that are mutually agreed upon and that ensure control over changes to the process. The level of detail specified in the document should be commensurate with the complexity and critical nature of the material or product being supplied. Other elements of an SAS include

  • A full description of all materials. This should include applicable test methods and documents related to materials.

  • A complete description of the manufacturing environment. The description should encompass environmental operating parameters such as temperature, humidity, lighting, cleanroom class designation, and any safety requirements. Additionally, depending on the materials produced, bioburden requirements and any applicable manufacturing material specifications should be included.

  • Descriptions of manufacturing equipment and capabilities. These should be provided in addition to critical process parameters and controls to be implemented to ensure reliability and quality.

  • The means by which the materials or components will be processed, received, and certified. This is an important element to include in an SAS, because it ensures that both parties have a common, agreed-upon methodology.

  • Packaging, labeling, storage, and transportation requirements. These requirements should be stated to ensure that the manufacturer receives the materials and components ready for use.

Key to the success of manufacturer-supplier relationships and integral to the supplier specification is having clearly defined change control parameters. Policies and procedures defining how changes will be managed, controlled, and communicated must be identified. In addition, suppliers must be properly trained to ensure that they are knowledgeable about requirements for managing change. The applicable policies and procedures for change management should be identified in the specification and the quality agreement.

Managing Quality

An OEM's quality department should manage supplier quality. Typically, this department has accountability for all aspects of supplier interaction, which includes monitoring and remediation of quality problems. The key areas for managing supplier quality include setting standards, developing training, conducting audits, and monitoring performance.

Standards. Supplier quality groups should take charge of developing corporate policies regarding requirements for supplier selection, qualification, and monitoring. Suppliers should be managed based on a risk assessment of their materials, components, and services. The level of risk associated with a particular supplier determines the level of detail in the specifications and the degree of manufacturer involvement. In addition, it affects frequency of monitoring, interaction for issue resolution, and measurement of performance.

Training. An important element in supplier relationships is ensuring that appropriate training is developed and implemented. Training ensures that suppliers are knowledgeable about the manufacturer's policies and procedures, as well as the OEM's end use of its product. Well-organized and well-executed training also serves to communicate and reinforce requirements and expectations to suppliers.

Audits. Supplier audits are scheduled according to the defined risk presented to a manufacturer by a supplier's materials, components, and services. Audits are conducted by an independent group and typically cover the following areas:

  • Supplier's quality system. Supplier policies and procedures are reviewed to determine how their quality processes perform.

  • Supplier's capability to implement requirements, effectively identify and develop corrective actions when needed, and adhere to established specifications.

  • OEM's supplier quality process. The process is verified as being effective for the selection, qualification, and monitoring of suppliers. Tracking the effectiveness of the supplier quality process provides useful data to refine requirements and criteria for supplier management. Looking at a supplier's process performance may uncover potential OEM problems, such as low yields.

  • Supplier's tracking and reporting of corrective-action closeouts.

Performance. Documenting the performance of a supplier for each item supplied is necessary to establish the items' acceptability. If a supplier's performance falls short of the manufacturer's requirements, improvement programs should be initiated.

Establishing supplier improvement programs includes implementation of corrections and changes in the supplier's facility. The program should address issues affecting quality of materials, components, and services provided. Corrections and changes may be based on performance established at the supplier, at the manufacturer's material receipt, or in production. Or, they could be based on product complaints received. Additionally, the OEM should monitor how the supplier responds to audit observations and whether the corrective actions are effective. The results should then be reported to the manufacturer's quality management team.

Successfully managing suppliers requires developing and maintaining a formal and ongoing supplier management process. If serious supplier problems are identified as a result of audits or nonconformance incidents, a supplier remediation plan should be implemented. Such a plan includes a number of steps.

First, it is necessary to perform effective failure investigations. Identify and document specific issues that need to be addressed to solve the problems. It is critical to designate responsibilities for implementing the solutions.

During the remediation process, it is also necessary to monitor the ongoing status of the implementation. Establish follow-up data-tracking requirements and specify time periods to ensure the effectiveness of the process.

Once the remediation is complete, conduct a formal review and closure of the problems. Finally, maintain documented and approved records of the actions taken.

Also integral to the supplier management process is periodic evaluation of alternative suppliers. It is a good idea to identify capabilities of potential alternative suppliers. That way, the information resulting from such evaluations is readily available if the existing supplier's remediation plans do not yield acceptable results.

Ongoing supplier management is contingent upon having effective metrics to track and report on a supplier's performance, problems, and status. Supplier status refers to whether a supplier is critical or noncritical, whether it has been audited or qualified, and whether alternative suppliers exist. Typically, supplier quality metrics address the areas of supplier quality process effectiveness, supplier responsiveness, and supplier status. To determine supplier quality process effectiveness, measures include comparing selected suppliers with other suppliers that have been identified. In addition, the qualification status of selected suppliers and suppliers with changes requiring change control approval should be examined. Ideally, the primary suppliers will have robust, high-performing, validated processes in place and will have supporting metrics to demonstrate process performance. However, this may not be the case, and comparing suppliers with alternative suppliers is a means to identify potential new material sources. It is important to keep in mind, though, that alternative vendors may not have been reviewed and qualified to the same level as primary suppliers.

Examples of supplier responsiveness measures are the number of nonconformance and audit corrective actions taken. Also important is the time needed to resolve any nonconformance and corrective actions. Additionally, metrics concerning supplier status can be developed and tracked according to agreed-upon measurement criteria. An OEM's supplier quality managers should conduct routine reviews of metrics and communicate the results to its functional organizations and managers. This periodic review drives improvements in the supplier quality process that can increase the overall performance and effectiveness of suppliers.

OEMs can maintain a supplier management process by conducting periodic updates of requirements as changes in existing products and processes occur or new products and processes are developed. Supplier audits should be routinely conducted based on the risks to the manufacturer posed by a supplier's materials, components, or services. Procedural requirements for a supplier quality management process should be defined and accessible, including specifications for products, components, and materials.

Conclusion

A robust supplier management process is critical for device manufacturers to effectively evaluate and select suppliers and subsequently implement agreements ensuring consistent material quality. The supplier management process defines the elements associated with a supplier's process that are critical to quality. It also defines how conformance to manufacturer requirements will be monitored and verified.

The supplier management process forms the basis of communication between manufacturers and suppliers, and it can be used to establish strong partnerships. As an element that is critical to device product quality, a strong supplier management process contributes to overall business performance through improved product quality and reduced cost.

Michael Kuehne is president of ACSYS Inc. (Hillsborough, NJ) and can be e-mailed at [email protected].

Copyright ©2007 Medical Device & Diagnostic Industry

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