Matthew Littlefield, President and Principal Analyst, LNS Research
The demands on quality organizations are rising across the board, but perhaps none as quickly or urgently as in the life sciences industries. While increased competition and the need to innovate certainly aren’t unique circumstances for life sciences, the level of scrutiny from regulatory agencies and the rapidly evolving nature of the supplier network are, placing an incredible burden on elevating supplier quality management capabilities.
Having the correct processes and tools in place is crucial for success, but it’s also important that as the more distributed model of outsourcing production grows, the way life sciences organizations view their relationships with suppliers should evolve and strengthen as well. In redefining the way life sciences companies interact and view their relationships with suppliers, it’s critical that buy-in be achieved at all levels across the organization, which means leadership must provide the tools and mindset to make this shift occur.
Filling in the Cracks on Purchasing Controls
As FDA regulations have strengthened within life sciences, there have been specific ramifications for supplier controls. According to recent analysis of 2014 Form 483s issues to device makers, purchasing control violations were up 17% over 2013. This is made further notable by the fact that nearly every other section of the QSR showed decreases.
Transforming the Supplier Relationship
As the supplier network grows in size and importance, it’s key that these companies’ perceptions transition from that of being a vendor to a partner, and in a way that suppliers view this shift as being beneficial to their own organizations and the role they occupy within the supply chain. It isn’t uncommon for supplier management o be seen primarily as a cost cutting measure, and this perception can fail to drive either the desired supplier initial reaction or ongoing behavior. Trust is paramount.
To build this foundation for trust, executive leadership across the enterprise needs to agree firstly on a common internal engagement for suppliers.
Defining a common initiative to engage suppliers
A good place for this to start is internal collaboration between the executive leadership of the quality and supply chain functions, using a pre-defined mechanism such as Operational Excellence or another internal world class manufacturing initiative as a starting point and catalyst. Indeed, we see many leading life sciences organizations developing these internal programs, which then spread out across the organization into other ‘pillars’ of Operational Excellence, which include Environment, Health & Safety (EHS), Asset Performance Management (APM), energy management, and operations.
Over time these systems are evolved into a common and unified management system along the appropriate leadership, and this can be extended outside the four walls of the enterprise into the supplier domain.
Building trust with the supplier network
A more direct way organizational leadership is building trust is to involve suppliers directly within the quality management system, through giving input into the NCR and corrective and preventive action (CAPA) management, as well as direct contribution to metrics. This hands-on involvement communicates the value and importance to suppliers on an individual level.
How Increased Supplier Involvement Contributes to Quality KPIs
Supplier Defect Rate measures the percentage of materials or products received from suppliers that fail to meet required quality or compliance specifications. As the rate improves, suppliers enjoy a more efficient manufacturing process, less scrap and better perfect order delivery numbers. For customers, there are fewer downstream disruptions to manufacturing processes, fewer quality issues passed on to customers, and better delivery of new products to market. As such, it’s a metric that indicates benefits to both parties, and one that sees some notable improvements when the supplier relationship is transformed.
Though technology solutions occupy most of the conversation around supplier quality management, and are no doubt an essential tool for life sciences to achieve quality excellence, the role of leadership across the organization is foundational in transforming the nature of the supplier-customer relationship that will subsequently maximize those tools.
This article is part 1 of a 2-part supplier quality management series. The next article can be found here.
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