Partnerships That Last: Building a Best-in-Class Approved Supplier List
Top five factors for choosing suppliers include audits and clear communication.
Kelly Lucenti, Millstone Medical Outsourcing
While the general economy may be struggling to regain its footing, the medical device industry continues to develop to meet the demand for innovative products that extend and enhance lives.Medical device manufacturers (MDMs) strive to answer the call for a broad range of new devices. They also focus on research and development in order to bring new products to market, find outsource service providers when internal resources become overwhelmed and position themselves to grow.
But as the industry expands, pressure is mounting from federal regulators and customers for MDMs to develop tighter controls on outside suppliers. The result is that MDMs are trimming their supplier lists, many of which include hundreds of vendors, and they are prioritizing relationships and establishing or overhauling approved supplier lists (ASLs). What are the hallmarks of a top outsource service provider, and how can a MDM build an ASL populated by best-in-class vendors?
Making the Case for Selecting Grade-A Suppliers
MDMs outsource for a number of reasons: to build capacity, focus on core competencies, lower costs and tap expert resources. Partnering with an outsource service provider for manufacturing, cleaning, and packaging of medical devices can enable MDMs to enhance quality, meet customer and regulatory demands and maintain a competitive edge. Partnering with the wrong outsource service provider, however, can adversely affect the company’s business and reputation. Some of the potential pitfalls include compromised quality, inferior procedures and documentation, missed deadlines, blown budgets, and worst of all, recalls.
MDMs are ultimately responsible for the products they produce, no matter how much of the manufacturing process is outsourced. The U.S. Food and Drug Administration (FDA) and its Center for Devices and Radiological Health—which is responsible for regulating firms that manufacture, repackage, relabel and/or import medical devices sold in the United States—holds MDMs liable for their products. MDMs are accountable for the quality of the end product and must answer for the level of quality with which the product is manufactured, cleaned, packaged, and distributed. Recently, the FDA enhanced its oversight of MDMs as well as the outsource service providers that are part of an MDM’s supply chain to ensure that adequate controls are in place throughout the production process.
The result is that MDMs are taking a careful look at their supplier lists, which often include hundreds of vendors from small machine shops to large outsourcing companies, to ensure that outsource service providers meet high quality standards that conform to FDA requirements.The review, prioritizing and ultimate trimming of a supplier list to establish an ASL can be incredibly time-consuming and expensive for MDMs.
The process often begins with the MDM informing suppliers that they strongly recommend that the supplier is FDA registered and ISO certified. Many suppliers cannot overcome the first hurdle because of the time and expense entailed in becoming compliant. With non-certified suppliers out of the way, MDMs can then focus on conducting an audit of each supplier and completing a detailed review of the quality systems, validation protocols and procedures.
Once suppliers have been scrubbed, a great shifting generally occurs. After scratching some suppliers off the ASL list, the MDM must then move the manufacturing, cleaning, and/or packaging of its product to vendors still on the approved list. This is another expensive and intensive process because it entails qualifying equipment and developing and institutionalizing validation procedures for each vendor and each process.
The revising of an ASL and the additional oversight of suppliers required by the recent push from the FDA creates issues and unforeseen short-term costs for the MDM. Eventually though, the MDM will reap significant benefits. In the past, MDMs sometimes partnered with an outsource service provider that offered a solution to one aspect of the production process.
For example, an MDM might have turned to a machine shop to produce a small to mid-size quantity of instruments to respond to an urgent need with a fast turn time. This decision not only made the total product life cycle more convoluted, it also forced the MDM to manage another relationship, address quality concerns and potentially lose out on the opportunity to work with another vendor with more expertise. With a streamlined supplier list, MDMs can enhance quality control, reduce management of outside service providers and create a tightened production process.
Top Five Factors for Choosing Suppliers
Selecting the right outsourcing partners is critically important. The FDA reviews quality systems MDMs have in place—from internal processes to outsourcing and the companies that provide the external service. And as government regulations continue to increase and enforcement becomes more robust, MDMs will have to enhance their quality systems. The economy has created an environment where cost-cutting is an important consideration. Plus, there is significant cost—including time and expense—involved in building, changing or severing a vendor relationship.
Establishing a partnership with an experienced, qualified supplier benefits the MDM in many ways. Quality is enhanced when an outsource service provider has the same level (or higher) expertise as the MDM. Such high quality from vendors also fulfills FDA regulations and quells customer concerns. Besides minimizing costs associated with changing suppliers, top-notch supplier quality can streamline operations, enhance services, and reduce the costs of bundled contracts.
The trick is choosing the right supplier. But how can MDMs be sure that the suppliers with which they partner are the most valuable ones? Here are the top five factors to consider.
Factor No. 1: The More Audits, the Better
The most important factor is ensuring that the outsource service provider can effectively demonstrate a commitment to quality. Top-notch outsourcing partners make quality compliance and control an integral and dynamic part of their businesses. One way to measure a consistent level of high quality is through the number of audits the supplier undergoes each year. How often is the outsource service provider audited by notifying bodies and clients? Many outsourcers are audited by MDMs, but some also are regularly audited by the FDA and International Organization for Standardization (audits under the 13485 standard are ideal). Auditing is essentially a system of checks and balances that enables an outsource service provider to refine processes and procedures for optimum performance. Some outsource service providers have their quality system reviewed as many as 50 times a year; companies with such a high number of audits are generally always ready with their best foot forward.The more audits a company withstands the more likely that quality is consistent and that industry best practices learned from multiple industry sources are being employed.
Factor No. 2: The Value of Strong Quality Metrics
The second factor also focuses on quality. Besides having quality processes in place and adhering to those processes, the best partners take quality a step further and deliver a product of higher integrity. For example, MDMs inspect product from outsource service providers. The best vendors have excellent rates of first-pass yield and on-time delivery stats. One way that top suppliers achieve such a level of consistency is by inspecting and tracking products coming in from component providers. The top tier outsourcer even provides quarterly findings, like vendor report cards, to the MDM as an extra check on second tier vendors. As a result, MDMs gain more knowledge in order to make better vendor decisions for future business and have better control over their supply chains.
Factor No. 3: Knowing is Believing
MDMs that take the time to know their suppliers and outsource service providers stand the best chance of developing partnerships with the give and take that results in superior quality and service. Questions to ask include:
• What are the provider’s core competencies? Do the provider’s biggest strengths correspond with the needs of the MDM?
• Trusting an outsource service provider comes from trusting the management team. Are the players experienced and accessible?
• Face-to-face interaction is critical. MDMs should meet the management team and tour the outsourcing facility. First-hand reviews of internal random audits, corrective action reports, complaints, and non-conforming material reports will create a level of transparency that benefits both the MDM and the outsource service provider.
• Finally, can the provider scale with the growth of the MDM? Is the provider willing to support that growth through investments in updated equipment and increases in personnel?
Factor No. 4: Clear Communication is Critical
The power of communication to determine the success or failure of a partnership is often underestimated. For example, as the MDM makes improvements over time to products or processes, there is a need for changes to design, validations and documentation. Handling these changes—both small and large—demands a clear understanding and communication of regulatory requirements. The best providers will easily establish a dedicated team, appoint a point of communications and clearly define team member roles and responsibilities. Establishing a regular communications schedule, which includes face-to-face meetings, helps facilitate an easy flow of information. Some outsource service providers take an additional step of employing state-of-the-art and customized enterprise
resource planning systems that offer enhanced visibility to track product over the Internet and improve efficiency. The goal of the outsource service provider or supplier should be to create a seamless connection with the MDM that helps streamline the total product life cycle.
Factor No. 5: Choose Best in Class
The best outsource service providers are knowledgeable and experienced in their core competencies. Experienced outsourcing partners provide a wealth of expertise that streamlines projects and processes.
With the experience of a variety of projects, customers, and challenges comes a history of developing and utilizing industry best practices. For example, top outsource service providers are able to leverage their knowledge to develop comprehensive project plans, establish effective validation plans and processes and formalize protocols for revising plans and documentation. Moreover, experience often enables an outsourcing partner to start projects several steps ahead of where other vendors might begin, which reduces costs and increases speed to market.
The medical device world continues to grow, but quality standards cannot lag behind. In shortening their lists of suppliers, MDMs can develop partnerships of greater depth and use those partnerships to trim costs and enhance quality, but they must select outsource service providers that enhance quality while providing cutting-edge services and scaling.
The benefits of an edited ASL comprised of cream of the crop vendors is worth the effort. Leading the list of benefits are increased speed to market, enhanced quality, the ability to reallocate internal resources and reduced costs. Perhaps the most important benefit in carefully selecting the outsource service providers that remain on or are added to a MDM’s approved list is the opportunity to develop a strategic partnership rather than a vendor/client relationship. The best outsource service providers—those with a demonstrated commitment to quality, with years of experience, and who are leaders in their field—serve as consultants and provide invaluable guidance. And, a truly strategic partnership allows a MDM to access expertise that can bridge gaps, prevent or solve problems, and generally stay a step ahead of the competition.