Matthew Littlefield, President & Principal Analyst, LNS Research
In today’s distributed, global economy, it’s typically a competitive disadvantage to not leverage the supplier network. It opens the door to cost savings, expertise, additional production capacity, geographic reach, and more. Reliance on external parties, however, does come with a number of quality- and compliance-related risks that can really make or break a product (and company).
The good thing is—when approached correctly—many of these risks can be mitigated or even entirely avoided. Supplier quality management technology and strategies have evolved considerably in the past decade, and if you’ve been standing on the sidelines, it’s time to get into the game. Below, we’ll share 5 things you need to know about supplier quality in 2014 that are sure to carry on into the coming years.
1. The Cloud Has Transformed Upstream Communication and Collaboration
Not all that long ago, communication and collaboration outside of the four walls of the manufacturing facility actually required the transfer of paper from one hand to another. With email, FTP, and so on, technology has come a long way since then. But even those modern modes of connection leave a number of concerning gaps. Today, companies are using the cloud to bridge them.
Cloud-based Enterprise Quality Management Software (EQMS) has transformed supplier interactions. Companies are using it to deploy portals that suppliers can log into to communicate quality specs, monitor upstream performance, and also enable a secure and controlled collaboration environment. It helps extend the same benefits of process automation and operational efficiency experienced internally.
2. Making the Investment to Build a Supplier Risk Scorecard System Pays Dividends
It’s not uncommon for a large Life Sciences company to deal with hundreds or thousands of different suppliers over the course of several years. During the relationship, critical performance information surfaces, but without a system for capturing and archiving it, that information has little long-term value. Market-leading companies are using EQMS as the basis for these systems, incorporating elements of automation and risk.
Today, supplier quality management modules found within EQMS solutions often have supplier risk scorecards. These may be used in conjunction with supplier portals to pull supplier performance and associate levels of risk to each supplier. When dealing with many suppliers, different facilities can use supplier risk scorecards to easily view which suppliers are able to hit expectations and which should be avoided or more closely monitored. This information only becomes more valuable over time.
3. Relationship Building Is the Cornerstone of an Effective Supplier Network
All of the technology in the world cannot replace the power of human relationships. It’s vital for Life Sciences companies to develop relationships with upstream suppliers and partners—especially strategic ones—beyond simply submitting a purchasing order via email. Because many suppliers are traditionally hesitant to share information for fear of it being used against them, building a rapport is crucial and often requires investment, but the payoff for doing so should far outweigh any time and capital spent.
Each of your suppliers likely has more than one customer, so taking the time to transform that relationship into a partnership can greatly improve accountability as well as willingness to accept new technology and training. With the deployment of supplier portals, new capabilities such as supplier corrective actions may be available, but there needs to be buy-in from the supplier. Relationships matter.
4. OEMs Have Been and Always Will Be the Face of Quality-Related Catastrophes
Although a quality non-conformance may have originated way upstream, it’s almost always the big brand—the OEM—that hears and feels the impact when a product negatively impacts a patient. Leading organizations are battling this by pushing more accountability onto suppliers and partners. This may include requiring certain standards are implemented (ISO:13485), as well as not asking for but requiring performance sharing via portals.
5. The Supplier Network Plays an Important Role in Closed-Loop Quality
Closed-loop quality processes—the bi-directional transfer of quality content and data across the value chain—are a staple of mature quality organizations. They’re also greatly enabled by EQMS. A recent LNS Research survey revealed 21% of companies have deployed EQMS and 34% are planning to do so. When crafting plans for your EQMS deployment, it’s imperative you do so with the supplier network in mind.
With EQMS as your quality hub, closed-loop processes can be built by streamlining supplier performance information between functional areas like manufacturing and R&D (and vice versa). For instance, R&D may share work instructions and quality specifications to a contracted supplier and then monitor as-manufactured data via the supplier portal.
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