Gerard Pearce09.10.08
Managing Supplier CAR Sickness: Symptoms, Causes, Cures and Prevention
Gerard Pearce
Supplier Corrective Action Requests, or CARs, can be the most challenging and time consuming of all corrective and preventative actions. Because, by their nature, supplier CARs are external to your organization, closing the loop on them is more difficult than with internal remedial activity. This can lead to either a disproportionate amount of resources being required or, as is more commonly the case, CARs that remain open well beyond a reasonable timeframe. For medical device manufacturers, such “supplier CAR sickness” has quality, financial and regulatory implications.
Ineffective supplier CAR management creates an exposure for the organization in two regulated areas. First, if supplier CARs are tied or mirrored with internal corrective and preventive action (CAPA), then there is a risk of failure to establish and maintain adequate procedures for implementing a CAPA, as required by 21 CFR 820.100(a) of the FDA’s quality system regulations. Second, supplier CAR management also should be detailed in purchasing control procedures designed to ensure that all purchased products and services conform to specified requirements as required by 21 CFR 820.50. Supplier controls were featured in nearly 20% of FDA warning letters throughout 2005-2007 that related to manufacturing and quality, so this is an area that is under the spotlight.
Examination of global medical device manufacturers that manage supplier CARs and in managing supplier CAR programs shows that the characteristics, challenges and solutions involved are remarkably consistent. Following is a summary of these aspects of supplier CAR “sickness.”
Symptoms
The most common complaint with respect to supplier CAR programs is unresponsiveness, which particularly is the case when responding to supplier audit findings. This occurs when CARs are considered a low priority and require time-consuming phone and e-mail communications to get results. The second most common symptom is the inadequate response. Either a priority or a capability issue, the inadequate response requires additional resources (often more technical) to reiterate requirements and expectations. Systematically, supplier CARs also are more difficult to track and manage because they cross organizational IT boundaries, which increases a reliance on manual methods, such as e-mail and spreadsheets, and subsequently increases the cost and risk of error. Pushback occurs to a lesser extent when a supplier acknowledges but rejects the request because the supplier is unable or unwilling to comply. Other symptoms are either variations or combinations of these, including evasiveness, lack of commitment or stalling. In any case, these symptoms all contribute to unnecessary increases in risk or resources.
Causes
As with the symptoms above, factors contributing to the problem are remarkably consistent. The causes overwhelmingly boil down to two main factors: capability and leverage. From a capability standpoint, some suppliers simply don’t have the resources needed to make the appropriate changes. This may be from a technical capability standpoint, where the expertise is not present, or from a capacity standpoint, where commitments to other initiatives (such as other customers’ CARs) mean that the expertise is not available. When it comes to leverage, companies are at the mercy of their suppliers when they use a sole source or buy in quantities that are not significant to that supplier. Without leverage, there are little or no consequences and, therefore, no incentive for the supplier to change.
Other factors are more systematic and stem from the structure of the supplier CAR program. If a program is being run “manually” using e-mail and spreadsheets, then it follows that the metrics, communication, follow-up, distribution and review would be manual as well. Such systems are highly inefficient and provide poor visibility into the health and effectiveness of a supplier CAR program. Also, from a systematic standpoint, companies that do not adequately differentiate between criticality of supplier CARs find themselves overwhelmed. In these cases, unnecessary effort is applied to supplier CARs that potentially could be reclassified or delegated.
Cures
The most common response to supplier CAR sickness is escalation—that is, raise the issue at higher and higher levels within both organizations until a resolution is agreed. This can be effective in the short term, for exceptional cases, but is not practical on the scale usually required. Another common approach is from a financial perspective—to encourage swift resolution through incentive (ie, more business) or penalty (less business, or a freeze on supply). Unfortunately, if purchasing quantities are not consistent with the costs of resolving the CAR, then this would have limited effect.
If a supplier response is inadequate, companies often find themselves in the position of providing “free consulting” to guide the supplier to the desired state. While this is a drain on quality engineering resources, it does provide an opportunity to collaborate and shape a supplier’s quality environment to suit one’s own quality requirements.
From a systems standpoint, a simple and effective first step in creating a more manageable collection of supplier CARs is to evaluate the classification process, so that resources are focused on critical suppliers/parts/problems. Non-critical CARs, or those involving lower risk or impact, could be delegated to less technical resources, outsourced to a third party or pushed to an alternative timeline. Also, automation is essential to eliminating non-value aspects of the supplier CAR management function. An automated system should transcend organizational IT boundaries, act as a central repository, monitor timelines, auto-notify stakeholders and allow for a controlled exchange of response and approval.
Prevention
To avoid being placed in a position of little or no supplier leverage, organizations typically try to increase purchasing power by maintaining a flexible supply base (ie, having options), consolidating spending and incorporating CAR responsiveness as a performance and contractual obligation. In many cases, where a sole source of supply cannot be avoided, companies focus on supplier relationship building. This incorporates joint quality goals and improvements, as well as leads to cooperative solutions.
To prevent a situation where supplier capability and capacity are issues, companies ensure that strategic alignment on quality improvement becomes part of the assessment and selection process. This creates a more receptive environment for CAR resolution and collaborative improvement. From an infrastructure standpoint, the best prevention is a solid foundation for automation and business intelligence. In addition to eliminating the risk and expense of manual methods, an integrated supplier CAR management system will generate comparative metrics with which to track progress and support lagging suppliers to keep up with the mainstream. From a resource standpoint, adjusting the process so that the most valuable (and scarce) resources are focused on the most critical supplier CARs will create opportunities to engage more cost-effective resources to tackle those classified as non-critical.
Successfully Driving CARs
Supplier CAR sickness is a common ailment for medical device companies with sophisticated supply chains. Left untreated, it leads to inefficiency, ineffectiveness and regulatory risk. Companies that face unresponsive suppliers or inadequate responses must work toward increasing their leverage and focusing their most valuable resources for maximum effect. By adapting supplier selection processes, enhancing tools used for managing supplier CARs and building and maintaining key supplier relationships, companies can look forward to a more comfortable journey toward continuous improvement. In addition to the improved efficiency, effectiveness and risk factors, companies will benefit from a reduction in the overall cost of quality by upstream improvements in the value chain.