Supplier Qualification: How To Get The Best Results

1 Comment / Supplier Quality Management / By Robert Packard / ISO, supplier qualification

In this article, you will learn strategies for better supplier qualification to obtain the highest quality components and services.

Supplier Qualification in ISO 13485:2016

Section 7.4 of EN ISO 13485:2016 states that companies shall “evaluate and select suppliers… based on their ability to supply product in accordance with the organization’s requirements.” This requirement is quite vague, but the medical device industry has developed a surprisingly limited number of approaches to address the requirement of this clause.

The most common approach is to ask for some combination of the following:

ISO certification,
a copy of the Supplier’s Quality System Manual,
completion of a Supplier Questionnaire and
performing a Supplier Audit.

Unfortunately, all four selection criteria are flawed.

ISO Certification

I think the best way to explain why these criteria are flawed is to use an analogy. Let’s compare qualifying a new supplier with recruiting a new employee. ISO certification is sort of like a college degree. You can make some general assumptions about a potential job candidate based upon which school they got their engineering degree from, but the degree is still just a piece of paper on the wall. As the old joke goes:

” What do you call the person that graduated last in their class at medical school?“

Doctor

Some registrars have a better reputation than others. Still, the name of the registrar is only as good as its worst client—who had four major nonconformities during their last audit and is about to lose that certificate. To improve this approach to supplier qualification, a potential customer could ask for a copy of the most recent audit report. This information is dependent upon the quality of the audit, but this would be a significant improvement over requesting a copy of the certificate.

CAUTION: Audits are still just samples—tiny samples.

Again, like degrees, certification must be relevant. ISO 9001:2015 may be a ‘nice-to-have’ quality for potential suppliers. However, it doesn’t hit the mark if you need them to have ISO 13485:2016 certification. Perhaps you need a European Normative version, or A11:2021 as well. For example, sometimes any law degree might be appropriate. Sometimes you specifically need a degree in healthcare law.

This makes it important to establish the criteria for your supplier evaluation early on in the process. Not just because it is required for standard compliance. It is difficult to evaluate a supplier with no guidance on how or what to evaluate them against.

Supplier Quality Manual

The second selection criteria mentioned is The Quality Manual. The Quality Manual is analogous to a resume. The purpose of a resume is two-fold: 1) to provide an interviewer with information, so they can ask the interviewee questions without looking like an idiot, and 2) to provide objective evidence that a company did not illegally discriminate against a candidate that the hiring manager did not like.

I suppose you could argue that the purpose is to help candidates get a job, but in my own experience, less than 10% of resumes submitted result in a job interview—let alone a job offer. The purpose of a Quality Manual is NOT to help a company get new customers. If I am wrong about this, I need to do a much better job of marketing my Quality Manuals in the future.

Some suppliers have the nerve to say that their Quality Manual is proprietary. Humbug! Proprietary information should not be in the Quality Manual. You can copy a manual from another company and edit a few of the details. I will gladly write you a Quality Manual in less than a week that will pass any auditor’s review. You can even buy a Quality Manual online (In fact, Medical Device Academy sells one… Online! POL-001 Quality Manual). This almighty document just explains the intent of the Quality System—which is to conform to the requirements of the ISO Standard. Several auditors will tell you that this can be done in just four pages.

When you request a Quality Manual from a supplier, your primary intent for supplier qualification should be to use this document for planning a supplier audit. Any other purpose is just a waste of your time—unless you need to write a Quality Manual of your own.

Supplier Qualification Questionnaire

The third selection criteria I mentioned was: a supplier questionnaire or supplier survey. Questionnaires are analogous to employment applications. Coincidently, supplier questionnaires are often required by companies when a Quality Manual or ISO Certificate is not available. Do you find the similarities eerie?

Questionnaires are typically 15-20 page documents that someone has plagiarized from a previous employer. I have seen various versions of this questionnaire, but several of them appear suspiciously similar. Hmmm?

I am not sure what the original intent of this type of document was, but I think it was intended to capture detailed information about potential suppliers for a company in the Fortune 500^®.

For most companies, 80% of the information on the questionnaire is meaningless. Customer requirements for a supplier are typically few in number and specific to the product or service being purchased. Therefore, please use your MRP system as a template and ensure that the questionnaire answers all the information you need to add the supplier to your system as an approved supplier. You should also have a product or service specification that gives you some more questions to ask.

Ideally, your questionnaire will be organized in the same order that you enter the information into the MRP system. Then this questionnaire will make the data entry easier for the purchasing agent, adding the supplier to the database. Questionnaires and surveys are great, but brevity is next to Godliness.

Supplier Qualification Audits

Finally, we come to the auditor’s favorite—supplier audits. Audits are similar to job interviews. Ideally, you want a cross-functional audit team, and you might need to visit more than once. Unfortunately, most companies cannot afford to audit every supplier. Some companies supplement with remote audits. I guess I think of a desktop audit as a “phone interview.” I use phone interviews to prescreen candidates before I pay more money and waste other people’s time with on-site interviews. Desktop audits of suppliers should not be used as a replacement for an on-site audit, so your supplier quality engineers do not have to spend so many nights at the Hampton Inn.

If audits are your best selection criteria, how can you make the most of your auditing resources? Also, how can you audit for supplier qualification if you only have enough auditors to audit 5% of the approved supplier list? I have the following suggestion: “Start at the end.” You might consider reviewing our article on hiring an auditor.

ISO 13485:2016 Clauses 8.5.2 / 8.5.3 CAPA

What I mean by this cryptic, four-word phrase is that auditors should start at the end of the ISO Standard with sections 8.5.2 & 8.5.3 (Corrective and Preventive Action (CAPA) Process). This is the heart of a Quality System. If you disagree, remember that FDA inspectors are required to look at the CAPA system during every Level 1 inspection. Registrars also look at the CAPA process during every assessment—not just the certification audits. The purpose of the CAPA process is to fix problems, so they don’t come back—ever.

If you think that a new supplier is never going to make a mistake, you might as well quit looking. You want suppliers with strong CAPA systems. If a supplier has a strong CAPA system, problems will be fixed quickly and permanently. To sample the CAPA process, an auditor only needs the following: 1) the CAPA procedure(s), 2) the CAPA log(s), and 3) a handful of completed CAPA records—selected not so randomly from the log(s). This can all be done remotely in a desktop audit. If suppliers are resistant to giving you the log or actual records, ask them to redact any sensitive information. If you have executed a nondisclosure agreement, the supplier should agree with this approach.

Analysis of Data for Supplier Qualification

ISO 13485:2016 Clause 8.4 Analysis of Data

Working from the back of the Standard, the next process to sample is clause 8.4 (Analysis of Data). There are four requirements of this clause. If the company has a requirement for customer satisfaction to be measured (ISO 9001:2008 section 8.4a), this is a great place to focus. There are also requirements to look at the trend of product conformity (8.4b), process metrics (8.4c), and trends in supplier data—such as on-time delivery and raw material nonconformities (8.4d). The quality of the analysis will tell an auditor as much about the company as the data itself. This process audit can also be performed remotely as a desktop audit.

A lot has changed since this article was first written. For example, if your potential supplier isn’t using ISO 9001:2015 you may want to verify that other areas of their quality management system aren’t outdated as well.

ISO 13485:2016 Clause 8.3 Control of Nonconforming Materials

Clause 8.3, Control of Nonconforming Materials, is the third area to look at. To sample this area, you will need the “Holy Trinity” again: 1) procedure, 2) log, and 3) records. In this desktop audit, you want to look very closely at any nonconforming materials that are reworked or accepted “as is” (i.e., UAI). Either of these two dispositions should be ULTRA-RARE. Everything else should be processed efficiently as scrap or returned to the Vendor (i.e., – RTV).

If a potential supplier passes all three “tests” described above, you are ready to address clause 8.2.4—Monitoring & Measurement of Product. In this section, there is a requirement to maintain records of product releases and to verify that product requirements are met. for supplier qualification, if you think you can effectively audit this by paperwork alone, the supplier is a good candidate for “desktop only.” However, if the lot release paperwork, batch record, or Device History Record (DHR) is a 50-page tome—then you better make your flight plans.

The good news is that very few suppliers will pass the first three tests and implode during the on-site audit. Also, with three process audits complete, you should be able to reduce the duration of your on-site audit. Finally, for low-risk suppliers, you have a strong basis for provisional approval of suppliers to proceed with prototype runs before you schedule an on-site audit. If you need a procedure for supplier qualification, please check our Supplier Quality Management Procedure (SYS-011).

For more information on supplier controls, quality systems, auditing, and regulatory submissions visit our YouTube Channel!

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Jun 9 2020

How to avoid the most common supplier evaluation mistakes

1 Comment / Supplier Quality Management / By Robert Packard / supplier qualification

The focus of this article is on the process of supplier evaluation and re-evaluation for medical device companies and how to document your evaluations.

You have several suppliers today, but did you have a rigorous supplier evaluation process when you first hired those suppliers? If your business is going to be successful, you need to treat your supplier evaluation process as a critical strategic process. Supplier qualification and is more important than the hiring of any senior manager. ISO 13485:2016 requires you to have a procedure for supplier evaluation and re-evaluation, but the type and extent of your supplier controls are not specified.

Which of your suppliers are critical or crucial?

Crucial suppliers were defined in a draft policy published by the European Commission as part of the introduction of the requirement for unannounced audits. Essential suppliers make a component or subassembly that is high-risk, or your firm cannot easily purchase the component or subassembly from another supplier. Critical suppliers for medical device manufacturers fall into one of three categories: 1) a contract manufacturer, 2) a contract sterilizer, or 3) a contract packager or labeler. These three types of suppliers may be selected for unannounced audits by a Notified Body. The FDA also requires these three categories of suppliers to register their facility.

Should you establish other supplier evaluation categories?

The short answer is no. The purpose of categories is to ensure that a large number of suppliers are consistently managed. Instead, try reducing the number of suppliers you are managing. Give your best suppliers more work, and fire the worst suppliers. If a component is “single-source,” encourage another supplier to quote that business before you look for a new supplier. It would be best if you took the time to evaluate each supplier thoroughly. If you don’t have the supply chain resources to do this, then you have three choices: 1) hire another person to help manage your supply chain, 2) fire suppliers that are not meeting your requirements, or 3) replace the weakest member of your supply chain team.

How do you re-evaluate existing suppliers now?

There are a lot of possible answers to this question, but unfortunately, the most common answer is, “because that’s who we’ve always used.” This practice, referred to as “grandfathering,” is a horrible approach to supplier re-evaluation. Suppliers that miss your requested delivery dates, and suppliers that ship nonconforming product should be required to implement supplier corrective actions immediately. You need to follow-up on these corrective actions and verify that the corrective actions were effective. If the corrective actions are not effective, or if new supplier issues occur, then you should find an alternate supplier as soon as possible.

Another stupid reason for selecting a supplier is “because they were the lowest bidder.” There’s an old government contracting joke about this strategy. It sounds something like this, “a million mission-critical parts, designed by engineers that have no clue what the real world is like, built by the lowest bidder, and inspected by a bureaucrat that can be bribed with a bottle of wine and some prime rib.” I tend to discount the quality of the lowest bidder every time. I always wonder what they forgot to consider when they bid on the job. If the lowest bidding supplier can explain why they have an inherent advantage over their competition, then maybe you should consider hiring them. If there is no rational reason why a supplier’s pricing is below their competition, this usually means that the supplier is desperate, or they plan to increase their pricing after you are a customer.

What should be your supplier evaluation and re-evaluation criteria?

All medical device suppliers should have a quality system, but ISO certification is not required. Therefore, if a supplier has ISO 13485 certification, you might abbreviate your initial supplier qualification process. However, ISO 13485 certification should have minimal impact upon your on-going supplier evaluation process. You need to know how well your supplier’s quality system is being maintained. If your supplier is sharing copies of their annual surveillance audits and FDA inspection reports with you, this will give you a better indication of the quality system effectiveness.

Consider performing supplier audits for supplier evaluation

Although it is not required, the best way to evaluate the effectiveness of a supplier’s quality system is to perform a supplier audit. Specifically, you should focus on the processes that are directly related to your product or component. Production process controls and final inspection are the most critical areas to audit. Other areas that are important to consider for supplier audits are 1) incoming inspection, 2) purchasing controls, 3) shipping, and 4) control of nonconforming materials. Conducting a supplier audit using the process approach is the most effective method. The process approach method of auditing will ensure that document control, record control, calibration, process validation, and training are sampled as support processes. The supplier audits may also be conducted as on-site audits or remote audits.

Certificate of Conformity (CoC) vs. Certificate of Analysis (CoA)

Another supplier evaluation criteria should be product conformity. You should be reviewing more than whether your supplier shipped the correct product and the correct quantity. Did your supplier provide a Certificate of Analysis (CoA) that summarized the inspection methods, acceptance criteria, and the inspection results? Or do you verify that a Certificate of Conformity (CoC) was included and accept the lot you received? If your company is only receiving a CoC from a supplier, you should be sampling the product at incoming inspection and verifying that the product is conforming with your requirements. Even if the supplier is providing a CoA, you should still perform periodic sampling and inspection of the product to make sure the CoA provided matches the actual product you are receiving.

Considering Improving your supplier questionnaires

If your company is requesting that suppliers complete supplier questionnaires, make sure that you are asking the most relevant questions. You need to know if your supplier can support remote audits. You need to know if there have been any significant changes to the quality system. You need to know if the company has had any significant non-conformities resulting from certification body audits. You need to know if there have been FDA inspections and what the results of the inspection were. You should also be obtaining monitoring and measurement data related to process conformity and product conformity. Asking your supplier to identify any shutdown periods or planned renovations is a required input for critical and crucial suppliers for CE Marked medical devices subject to unannounced audits. It would help if you also were asking your supplier to update the names, titles, and contact information for key management personnel. Would you like a copy of our supplier questionnaire?

What should you be doing to address the Covid-19 pandemic?

As a consequence of the Covid-19 pandemic, many suppliers have had significant disruptions to their supply chains, workforce availability, and transportation vendors. Since many medical device products are urgently needed during this pandemic, it is important to ask suppliers to provide a summary of their current situation and any analysis they have done to assess potential risks that could disrupt your supply chain. Does your supplier have adequate personal protective equipment (PPE)? What type of precautions is being taken to ensure that employees don’t exhibit symptoms of Covid-19 illness? Does your supplier have a policy for self-quarantining if an employee is exposed to someone that has the virus? Does your supplier have a disaster recovery plan?

Consider using size for supplier evaluation

Bigger is not always better. If you are a small customer of a large supplier, your needs will seldom be important to your supplier. Alternatively, if your company is much larger than your supplier, your supplier may not have the resources to grow with you and keep up with your current demand. When you are initially qualifying suppliers, try to select suppliers that are approximately the same size as your company or slightly larger. You should also consider identifying more suitably sized suppliers if you have a significant size mismatch or one develops over time.

What if you don’t have the resources to evaluate your suppliers?

Supplier evaluation and re-evaluation is a strategic function that impacts your profits, your ability to deliver product on-time to your customers, and nonconforming product can tarnish your company’s reputation. Therefore, your company needs to invest resources to analyze your supply chain. It would help if you had suppliers that have excellent quality and suppliers that will encourage your company to improve. Are there best practices you can learn from your suppliers? Is your supplier able to help you manage your inventory? Can your suppliers help you solve production problems? Supplier evaluation should only be secondary in importance to your design process and post-market surveillance. As they say, “garbage in equals garbage out.”

Do you need additional training on supplier evaluation?

On June 25, 2020, at 11 am EDT, and we are hosting a live webinar on how to qualify your suppliers. In this webinar, you will learn how to qualify new suppliers even if they don’t have ISO certification and best practices in supplier evaluation. We will be sharing a new supplier questionnaire that includes questions to help you assess whether a supplier is capable of supporting remote audits. We will help you develop a strategy for the allocation of supply chain personnel, and show you how to convince top management to prioritize supplier audits.

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Jan 2 2013

3 Tools for Effectively Qualifying Suppliers

4 Comments / Supplier Quality Management / By Robert Packard / statistical process control, supplier qualification

For every task, you have a choice of tools that you can use. For qualifying your suppliers, are you using the correct tools?

This blog reviews how to utilize statistical process control, process validation, and supplier auditing to qualify suppliers effectively.
If you could afford to audition suppliers for a few months against hundreds of other competitors, then only the qualified suppliers would be approved. Unfortunately, you don’t have the same budget that American Idol has. So what should you do instead?

Most companies use the same three, tired tools to qualify suppliers: ISO Certification, Quality Manuals, and questionnaires. ISO certification is a weak tool because certification is only as good as the registrar’s worst client. Quality Manuals are intended to define the intent of your supplier’s Quality Management System, while most of the details are located in procedures. You only need a copy of your supplier’s Quality Manual to help you plan audits. Supplier questionnaires seem to be the most popular tool, but most of the questions require a “Yes/No” response that suppliers rarely answer negatively. To assess the qualifications of potential suppliers more effectively, try using the following tools instead:

Tool # 1: Statistical Process Control

Most companies require a Certificate of Compliance (CoC) with every shipment. A CoC is useless. Just like the “Yes/No” responses to questionnaires, you will never see a CoC that indicates something is wrong. A Certificate of Analysis (CoA) is much more useful, because the CoA has actual data, and the tolerance range is typically indicated for each test or measurement that was performed by the supplier. The best report you can get from a supplier is a statistical analysis of each specification during the prototype production lot. When you have a Statistical Process Control (SPC) run chart, you know quantitatively if the supplier is capable of making an acceptable product. The run chart can also be used to develop an appropriate sampling plan for incoming inspection.

Tool # 2: Process Validation

Process validation is much more than determining if a process is capable of producing a consistent product. An SPC run chart can do that. Process validation tells you what range of operating parameters will produce a consistent product. Therefore, when you have process deviations or measurement devices are slightly out-of-calibration, you will know if your supplier’s process will still make an acceptable product. The validation of a process should also identify which variables are critical indicators of the process. This information can be used to reduce the number of variables and specifications that are monitored for a production process, and focus both your supplier’s resources and your own.

Tool # 3: Supplier Auditing

A multi-disciplinary team audit of a potential supplier is an effective tool for assessing a supplier’s qualifications and will help build a stronger relationship between your team and the supplier’s team. Before you conduct an audit, it is important to plan the audit to ensure you get the greatest possible value. The following recommendations are important to supplier auditing:

Use a risk-based approach to auditing suppliers (this goes beyond just critical and non-critical)

Strategically select auditors and train them well
Plan the auditing goals and objectives for the team in advance
Create a formal audit agenda that defines which processes each auditor will be focusing on

Auditing 100% of your critical suppliers may seem impossible, due to limited resources, but have you ever seen a cost/benefit analysis?

What’s the cost of rejects, rework, and product redesign?

Supplier Quality Management Webinars Available

Are your Suppliers Qualified? Prove It!

http://robertpackard.wpengine.com/suppliers-qualified-prove/

Supplier Auditing and Remote Auditing: Tips to Save You Time and Money

http://robertpackard.wpengine.com/supplier-auditing-and-remote-auditing-tips-save-time-money/

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