Supplier Quality Management: A New QMS-Based Approach

According to research firm LNS Research, fewer than 1 in 5 companies have a robust supplier quality management process. Even more revealing, those that do enjoy a 16 percent lower cost of poor quality (COPQ) as a result.

Beyond increased costs, inadequate supplier quality management has the potential to bring adulterated or deficient products into the market. The results could lead to post-market patient/customer harm, cause brand damage, and attract the scrutiny of regulators.

For example, two recent U.S. Food and Drug Administration (FDA) warning letters from January 22 and January 27, 2021, cite significant deficiencies around supplier qualification, raw material verification, and quality systems. Regardless of whether you are manufacturing a drug or a device, poor control of your suppliers can create significant risk.

For many companies, paper-based and spreadsheet-based quality processes are a key cause of supplier quality issues. Process gaps allow problems to fall through the cracks. Furthermore, the segregation of records stands directly in the way of communicating and collaborating with suppliers.

Here we look at a new approach to supplier quality management, focusing on how to automate the quality management system (QMS) to improve quality and reduce risk.

Download our case study to learn how one global pharma and chemical manufacturer uses AssurX supplier quality management tools as part of its enterprise QMS

Building Your Supplier Quality Management Workflow

Automating processes with quality management software allows you to close gaps by configuring the software to your existing processes. Drag-and-drop technology allows the implementation of workflows that launch processes faster according to your precise business process needs.

One thing to watch out for is having to adapt your processes to accommodate the limitations of QMS software. It’s an inefficient approach that often means people stop using the software altogether. The result is wasted resources and potentially even implementation failure, while the organization reverts to manual processes using paper and spreadsheets.

As you map your supplier quality management workflow to the QMS, consider integrating  interdependent quality processes including:

• Audit management
• Corrective action
• Document management
• Complaint handling
• Nonconformance tracking
• Training management
• Risk management

Integrated quality management systems improve efficiency through connected, concurrent processes. The more connected the quality management solution is, the more an organization can focus on improvements rather than maintaining disparate systems.

Centralizing Key Supplier Documentation

Document management is a critical challenge when it comes to managing supplier quality because failure can lead to expensive consequences. A digital QMS is essential to centralizing key documents such as:

• Certifications: Instead of having to access multiple systems, manufacturers can view documents such as supplier ISO 9001 certificates in one place to quickly determine whether suppliers meet company standards.
• Specifications: Keeping specifications in one place and sharing them via controlled access to the QMS can help avoid versioning errors and delays common to share documents via email.
• Supplier quality agreements: These documents are a best practice for establishing clear expectations and KPIs. Linking them to the supplier record means you can easily track supplier compliance and refer back to these documents when communicating with suppliers.
• Supplier corrective action request (SCAR): Managing SCARs in the QMS helps track communications so you don’t have to sort through (potentially outdated) email threads. Everyone can easily see tasks, status, and future steps.

Conducting External Supplier Audits

Performing audits of a supplier’s plant is an important part of ensuring suppliers have the capability to deliver on a company’s quality requirements. Manufacturers can leverage audit management tools in the QMS to simplify external audits of supplier facilities, utilizing capabilities such as:

• Web-based access so auditors can access audit checklists from a mobile device
• Responsive web design that makes it easy to record audit findings on a smartphone or tablet
• Offline data capture for areas in the plant that may have spotty Wi-Fi connectivity

Leveraging Supplier Scorecards

Supplier scorecards allow manufacturers to quickly determine whether a supplier continues to meet standards. They provide an objective measure of performance based on critical to quality (CTQ) metrics, such as on-time performance, non-conforming product, and number of SCARs.

Each of these metrics can be weighted, assessed for risk, and then combined for an overall score. Establishing approval criteria means the QMS can even show the score as green (approved), yellow (warning), or red (not approved) for data-driven decisions on which suppliers to work with. These scores can also be used to determine how to modify incoming inspection of materials.

Within the supplier scorecard, manufacturers should also run trends and analysis on supplier performance data. For instance, you might create run chart graphs that are updated with the number of open SCARs or audit findings by month or number of first pass lots.

In addition to helping quickly identify issues that need to be resolved, supplier data can be used for developing leading indicators. These metrics provide advance warning of potential quality issues, compared with lagging metrics that describe historical performance.

Learn the elements of an effective supplier scorecard

Collaborating with Suppliers

Remote work is the new normal, but that doesn’t mean manufacturers should rely on email to communicate with suppliers. Email is a disjointed, time-consuming process that makes it hard if not impossible to efficiently track historical communications.

Consider the potential implications of a supplier accidentally using an outdated specification document. Depending on what has changed, the result could mean a massive amount of scrap, rework, and associated costs and delays.

The EQMS-based approach to supplier communication grants suppliers limited access to the QMS so you can conduct all communication, in near-real-time, within the supplier quality management solution. This gives manufacturers a secure single source of truth for all supplier-related communications, as well as permission-based QMS access where suppliers can view communications specific to them. These may include:

• Notifications of policy or specification updates
• Assignment and tracking of corrective action tasks
• Information requests about changes to material orders in process
• Urgent communication about incoming or in-process material issues
• Notifications about supplier quality meetings and the status of action items/tasks
• Supplier initiated notifications about production or delivery issues impacting materials

Additionally, manufacturers can be sure that all the exchanged data and information is securely tracked and recorded in the QMS, where it is auditable for future reviews.

Suppliers have an enormous impact on a manufacturer’s product quality, safety, and customer satisfaction. And at the end of the day, if there’s a problem, your company’s name is on the line. The swift spread of information online combined with pandemic-related supply chain turbulence means manufacturers can’t afford to take chances with supplier quality. At the same time, some manufacturing sectors are seeing record high orders, creating a key opportunity for companies.

Conclusion

A company’s success depends to a large degree on its suppliers. Therefore, it is imperative to foster collaborative and communicative supplier relationships.  For many companies, today’s challenges are acting as a catalyst for digital transformation, helping manufacturers build an advantage despite current economic disruptions. They are leveraging QMS automation to gain greater control of understanding and resolving supplier quality issues before they can become serious problems.