A Complete Approach to Supplier

Quality Management
Utilizing Both a QMS and a Relationship
Management Model to Address Industry
Challenges and Changes

Presented By Ed Cook
Introduction
•  As Supply Chain professionals, we embrace
the idea that our outsourced processes are an
extension of our business…
•  But what does that REALLY mean?
•  How do we translate this ideal into practical
management of the supply base?
•  How do we monitor the performance of the
supply base and our management of it?
•  How do we meet the challenges and
changes in industry?
Supply Chain Challenges We Face in Industry
•  Characterizing and Quantifying Product Risk (including
manufacturability risk)
•  Risk Factors
–  Economic
–  Geopolitical
•  Supply Chain Integrity
–  Material Integrity
–  Supply Routes
–  Interruptions to supply flow
•  IP (intellectual property) Issues
•  Regulatory
–  Material-Oriented: RoHS (Restriction of Hazardous
Substances), Conflict Minerals, FMD (Falsified Medicines
Directive), etc.
–  Multiple medical and pharmaceutical cGMP regulations
Supply Chain Challenges We Face in Industry

•  Compliance and Quality

–  High Level of Supplier Performance
–  Data integrity, record retention and easy retrieval
–  Common Purpose – internally and externally
•  Secure Supply Chain
–  Consolidation through partnership
–  Mitigation of risk factors
•  Manufacturing schedule fulfillment (on-time
delivery)
 Traditional Supplier Quality Model
•  Audit-centric
•  Partial SQMS* (focused on aspects related to
audits)
•  Generalist approach to industry segments
•  Generalist approach to suppliers
•  Little opportunity to develop meaningful
relationships with suppliers beyond compliance
requirements
* Supplier Quality Management System
Implement a Proactive Risk-based and Complete Approach

•  Auditing is not enough…

–  MUST be properly independent
–  It is a necessary part of supplier management, but it is
only a snapshot in time (static feedback)
–  Prone to bias of individual auditors
–  Effectiveness varies by auditor
•  A risk-based, QMS approach (fully deployed,
applied to suppliers) combined with Relationship
Management (RM), in conjunction with Supplier
Auditing will yield a more comprehensive,
dynamic and robust evaluation of the supply
base
Structure: Complementary Features

SQMS Features:
Policy & Procedure
Quality Agreement Relationship
Management Management Features:
Management Oversight 1:1 Liaison with Key Suppliers
Process (Supplier Quality Performance-based KPIs
Operations Review)
Quality & Business Meetings
Documentation / Records with Key Suppliers
Management & Controls
Assistance with Issue
Supplier IT Management Resolution
Maintenance of Supplier New Product Changes
Change Notifications
Supplier Development Activities
Maintenance of Approved (Certification)
Supplier List
Audit Activities
Auditing
•  Supplier Auditing
–  Audit Type: On-site, Third-party, Desk-top, QMS, cGMP, Process
Audit, Focused Audit, Technical Assessment
–  Audit Frequency
•  Determine frequency based on risk and performance
•  Auditors must be independent and objective
–  A RM component can allow for swift and robust issue resolution
and finding CAPA closure while maintaining auditor independence
•  Fulfillment of the Audit Schedule is a compliance activity-it is
mandatory!
•  Skill and focus as an auditor is critical to success
•  Pre-audit activity is critical
–  Cross functional team, plan audit, review inspection and CAPA
data and previous findings
QMS Activities:
•  Supplier Change Management
!  Defining expectations: Purchase Orders and Quality and
Supply Agreements (Change Notification)
!  Impact assessment of change
!  Qualification/Approval of change
•  Tier Levels
!  Based on risk assessment of material supplied
!  complexity of the site, process, product
!  Supplier controls based on tier level and supplier
performance
!  Supplier relationship management by category
QMS Activities:

•  Manage Quality Risk in the Supply Chain

•  Set Audit Schedule
•  Supply Agreements
•  Quality Agreements
•  Process Change Notifications
•  Maintain Audit records and Supplier Files
•  Drive CAPA Closure and Audit Closure
•  Ensure all records are complete, accurate
and retrievable
Monitoring and Measurement (Joint Activity)

•  Balanced Scorecards focused on strategic, critical or at-risk (poor performing)

Suppliers
–  Agreed upon by both the Organization and the supply base
–  Drives ACTION that’s agreed upon by both parties; that reduces risk for all
–  Provides characterization and objective evidence of risk
•  Annual Review of supply base
–  Delivered lot conformance to drive supplier controls
–  Certification
•  SQOR (Supplier Quality Operations Review)
–  Scorecards, Probational Suppliers, Audit Status to closure, Quality
Agreement Status, Continuous Improvement and Significant Events
–  Attended by QS VP, Procurement, Auditing, Site Leaders, Ops QA VP’s,
Conducted Monthly
Relationship Management (RM) Purpose:
•  Manage Key Suppliers: Critical from Quality, Spend
or Strategic perspective (sole source, proprietary
tech)
•  On-site Presence
–  Quality/Business Reviews, In-plant personnel, Technical
Assessments Leverage relationship to drive overall
improvements, thereby reducing risk
–  Production Part Approval Process (PPAP) with Critical
Components/Materials and Joint Kaizen Events
•  Supplier Development Activities: PPAP, Training,
Quality Tools, Rubrics, Investigation and Response
Writing
•  Manage and address Underperforming Suppliers
Relationship Management (RM) Activities:

•  Engaging SME’s at both Company and

Supplier sites
–  We proactively go to supplier sites….not just for
audits
•  Supplier comes to our plants

–  Develops and drives a deeper understanding of

the processes and business needs on both sides
of the production relationship
Relationship Management (RM) Activities:

•  Leveraging best practices (QA/QC/QMS) to

educate and develop supplier

•  Sharing practices on
•  CAPA
•  Complaints
•  Robust Investigations and effective Root Cause Analysis,
•  Production, Process and Laboratory Controls
•  tools and rubrics exposes suppliers to new concepts
•  SCAR/CAPA Rubrics, PPAP
Probational Supplier Status and RM
•  Assure progress with an underperforming supplier
when downgraded
•  In addition to increased Incoming Quality Assurance
(IQA) controls, Probationary Status requires a
written, binding Improvement Plan (IP)
–  RM must be leveraged for this to be successful
•  Work collaboratively with Supplier on developing IP
•  Work collaboratively to monitor and expedite closure
•  Leverage relationship to expedite return to approved
status
–  Collaboration improves likelihood that supplier will
improve and thereby reduce future and present risk
–  Collaboration ensures a robust improvement effort
Benefits of Combining the QMS and RM
-Drive true understanding of the
A good relationship makes it product need
-Understands the “Why” and
easier to… contributes to the “How” vs. just
handing them a spec – a partner in
product development

- Training, kaizen events and other

CQI & Supplier Development
Joint Initiatives
- Drive Compliance and ownership
into the supply base

- Better understand products,

design and technologies for
industry segments
- Drive swift resolution of issues
- Better characterization of risk
A Complete Approach to Supplier Quality Management

•  Thank you for your kind attention!

•  Questions?