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Global Harmonization: The Key to Compliance that Spans the Supply Chain

By Brenda Percy, Content Editor, EtQ Inc. | February 3, 2016

Business today has become increasingly global in nature. Life science organizations in particular often extend manufacturing to suppliers who are located around the world. For suppliers to effectively operate within this global environment, a harmonized solution is needed.

Global harmonization means essentially enabling all parts of a global enterprise to align processes and remain consistent. This is accomplished by creating a standard quality process that is used by each site. By harmonizing the quality management system (QMS), an organization will enable its different sites to operate on a common platform and ensure consistency, while allowing them to maintain unique business processes.

This becomes even more essential in larger corporations because individual sites tend to deviate in corporate mandated processes as they grow. Causes of process deviations may include more systems being added to accomplish an individual site’s goals; and acquisitions and mergers, which introduce new processes along with new systems. With these silos adding up, eventually there will be too much diversity across individual sites, resulting in disconnected processes from one site to the next.

The following article will explain the need for creating a global, harmonized quality process to maintain consistency in a global enterprise. It will also cover how suppliers will benefit from being included in these initiatives.

The Need for Global Harmonization
A global enterprise often consists of different divisions within an organization working toward a common goal, but with individual processes. Harmonization standardizes processes to ensure consistency so all sites will be aligned in their approach to quality. With many organizations extending manufacturing to suppliers, the supply chain will also benefit from harmonization.

Excluding the supply chain from harmonization initiatives can pose challenges to supplier quality due to:

Lack of Visibility: Many companies streamline quality operations within their company-improving processes, taking corrective action, maintaining compliance, and more. As demand grows, these companies must outsource to suppliers to provide them with the components they need to continue to meet such demand. If supplier quality is poor, the overall product suffers. Without visibility into the supplier’s quality system, it is difficult for companies to ensure a high-quality product.

Cost of Poor Supplier Quality: When a product fails to meet quality standards, it is often the brand owner that must incur the liability for such events. Companies will track the cost of poor quality (COPQ) within its organization, but often fail to track the full cost of poor supplier quality (COPSQ). While many companies will track material costs as they relate to suppliers, the non-material costs such as quality department overhead, inspection overhead, supplier communication, and administrative costs are often overlooked. As a result, the overall COPQ becomes inaccurate due to supplier quality issues above and beyond material costs. Companies often attribute this to the cost of doing business, leading to higher unit costs. Making suppliers liable for both material and non-material expenses can help to recover costs due to poor quality.

Lack of Communication: When companies enter into a supplier relationship, certain procedures and practices are agreed upon. But without a continual auditing process, there is no way for the brand owner to effectively ensure that the agreed upon practices are being followed. Without constant supplier collaboration, processes such as nonconformance and corrective actions can ultimately misalign the supplier’s practices with the brand owner’s, leading to quality gaps in the supply chain.

Technology Prevents Integrated
Relationships: Often, technology plays an important role in how a company’s systems integrate with those of your suppliers. If the systems differ, there may be technology hurdles to overcome. It is sometimes difficult and costly to bridge the technology gap, and many companies are either reluctant or do not find it cost effective to make the effort to integrate. This results in gaps in communication from one system to the next, and overall traceability of quality processes suffer. Being able to communicate with a supplier on a technology level is critical in maintaining a consistent system.

Security Concerns: Supplier relationships should be interconnected, but there can be a certain level of concern when allowing suppliers into a company’s systems. While it is important for suppliers to be involved in a process, it can be a detriment if too much access is granted. Many companies opt to not integrate with suppliers simply out of security concerns or fears they may learn too much. While a valid concern, eliminating suppliers completely from a system can harm efficiencies in the relationship, increasing gaps in communication and limiting the quick resolution of quality issues.

The QMS as a Platform for Harmonization
The QMS provides the speed and efficiency that is needed to keep up with the rapid product lifecycle of the globalized life sciences industry. It provides a consistent and harmonized framework for common quality practices and enables the organization to extend quality to the supply chain, achieving compliance best practices beyond its four walls.
Harmonization enables a process that offers the following benefits:
  • Repeatable: Consistency is needed before conformity to help ensure harmonization will be possible. Therefore, the process must be able to be repeated as needed to ensure it will provide consistent results. In fact, one of the things team members are looking for when reviewing standardization efforts is a process that provides duplicate, successful results from any site within the organization. This is important because if the process has results that vary from site to site, it has not been effectively standardized, which will affect harmonization.
  • Adaptable: Not all of an organization’s sites operate on the same level, especially with technical resources. The process must be able to be tweaked as needed to accommodate all types of business systems, while still maintaining each sites’ common practices.
  • Auditable: A process must be audited to ensure its accuracy and effectiveness. An automated QMS with an integrated audits program can help the organization to monitor and continuously improve its processes through the use of regularly scheduled audits.
The Elements of Global Harmonization
When starting the journey to a globally harmonized solution that incorporates all of the sites within an organization in addition to its suppliers, the following are essential for success:

Common Corporate Standard: Having a common corporate standard in place is important when undergoing a harmonization initiative because it lays the foundation for success. A common standard is necessary to ensure that each site is following the same guidelines. To create a common standard, a company needs to implement processes that will be followed at each site. Collaboration is a critical factor in the success of a harmonization effort.

Flexible Software Solution: When undergoing global harmonization, an organization needs a QMS that can support the harmonization initiatives. Most QMS solutions are web based and can support multiple sites on a single software environment. Leading-edge solutions recognize each individual site and can display only the relevant data elements that pertain to that site. This technology allows a corporate standard to exist, while each site can add individual unique elements—all in one system.

Project Team: An organization needs governance of the harmonized system to ensure that the standardized process is initiated correctly and does not eventually veer off track. Governance will allow an organization to verify the effectiveness of processes and ensure continued process success.

Once processes have been harmonized, and suppliers have been given access to the quality system, an organization will benefit from:
  • Real-time Visibility: Allowing suppliers to work in the QMS is beneficial for both parties. Suppliers can more quickly fill out forms related to their processes than they would when using offline methods and the organization is provided with real-time visibility into its own quality operations. This gives the company control over quality that affects it beyond its enterprise. By providing real-time visibility, suppliers can participate in the process in a limited capacity, while data that is not relevant to them is kept separate.
  • Real-time Participation: In the event of noncompliance, real-time collaboration in the quality system allows the issue to be resolved quickly. Conversely, in disparate systems, there is often lag time when the supplier tries to resolve the issue. This capability makes quality and compliance a collaborative effort, and effectively reduces the cycle time.
  • Compliance: Trying to resolve supplier quality events may result in time lost for the organization. A QMS ensures that visibility and control are present in the supplier’s process, which will allow an organization to get compliance right the first time. This reduces the time to market, ensuring that neither time nor quality is lost for the organization.
  • Security: Technology has evolved and security can now be placed on various aspects of the software to ensure that external entities see only what they need to, and guarantee that private data is kept that way. On top of that, the organization still has control over its data and can allow suppliers to operate in its environment while seeing only what is relevant to them.
To operate effectively in a globalized environment, an organization must extend the quality system outside of its four walls and to the supply chain. This ensures that quality and compliance is not just maintained within the enterprise, but beyond it to all necessary parties involved. Global harmonization connects processes and sites to provide consistency throughout every location, while enabling each site to maintain its unique processes. By allowing suppliers with greater visibility into business processes, organizations can enjoy and maintain greater collaboration from supplier to stakeholder and benefit from an increase in product quality and compliance. 

Brenda Percy is EtQ’s content editor. She is responsible for growing the EtQ blog and managing the strategy and contributions of all content. She sets and upholds EtQ’s overall content strategy and editorial standards, and manages the company’s public relations initiatives. Contact her at bpercy@etq.com.