Making the Case for an Integrated QMS-BMS

I have spent more than 25 years working for or consulting with U.S. Food and Drug Administration (FDA)-regulated industries, and with each passing year, I’ve grown more confident that Quality Management Systems (QMS) can and should be used as an overall Business Management System (BMS).

I realize that some experienced professionals will disagree with me. I’m sure it wouldn’t be difficult to find an executive of a start-up or small medical device firm who believes that his or her company’s QMS does not help at all with marketing, sales, accounting, and finance, or even human resources. I partly agree (surprising, considering the headline for this column). I cannot fully concur, though, because QMS requirements like 21 CFR Part 820 Quality System Regulation for medical devices and 21 CFR Part 211 Current Good Manufacturing Practices for finished pharmaceuticals provide minimal mandates for human resources, lack accounting and finance requirements, and barely address sales and marketing considerations. I would also note that regulatory compliance does not increase market demand or help much, if at all, with product sales or services. 

Still, I believe that QMS is an effective business management tool because the business elements can easily be incorporated into the QMS. A company that integrates QMS and BMS has a superior business management system compared to a firm with a minimum compliance philosophy. I have worked with many companies that struggled with significant regulatory compliance problems, and found the BMS to be responsible for those troubles (though regulatory and quality functions operations contributed as well). Consequently, the companies had to change their BMS in order to regain and sustain regulatory compliance.  

You might wonder why I would associate regulatory problems with business. It’s simple, really. The number of FDA-ruled companies that run into regulatory trouble with the FDA or related agencies is too numerous to count. Consider, for example, recent victims like Theranos Inc. and Valeant Pharmaceuticals International, two fast-growing companies that encountered major business problems from regulatory issues. Theranos is a health technology firm that grew incredibly fast, earning a $9 billion valuation in 2014, but then faced mounting criticism from regulators over the efficacy of its diagnostic testing expertise. A Wall Street Journal report published late last year raised serious questions over the accuracy of Theranos’ claims and its proprietary technology; the company is currently trying to avoid sanctions in the wake of deficiencies discovered at its California laboratory earlier this spring. 

Valeant Pharmaceuticals’ downfall was, in part, centered around its lack of contract manufacturer controls. Last August, the company’s stock was valued at roughly $90 billion and trading above $260 per share but its good fortune was short-lived—Valeant’s worth depreciated steadily as the U.S. Senate investigated its 800 percent-6,000 percent drug price markup and its specialty pharmacy unit (which the company consolidated but did not adequately disclose to investors) was accused of improperly filing scripts. In addition, a delay in reporting financial results nearly put the company’s $30 billion debt load in default. Valeant stock is now down more than 90 percent from last summer’s peak and has lost more than 70 percent of value so far this year. 

One way to test the theory that QMS can be used as the BMS is to think about aspects of quality management that may not seem like good business requirements. Take the QMS mandates for organization and personnel, for example. Clear-cut organizational responsibilities, I will argue, are valuable components of any BMS, as they can help deliver quality products and services. I’ve heard the argument that the QMS gets in the way of business because it is so bureaucratic but I believe it is bureaucratic only if the company allows it. Innovative methods for establishing clear-cut organizational responsibilities can be used to comply with the QMS requirement for organizational responsibilities, as well as every other QMS requirement. 

Which of the following QMS requirements would not be elements of good business practices? (Note: This is not an exhaustive list of QMS requirements):

• Buildings and Facilities
• Internal Quality Audit
• Equipment
• Written Procedures
• Materials
• Training
• Production and Process Controls
• Traceability of Materials and Components
• Packaging and Labeling
• Control of Nonconforming Product
• Warehousing and Distribution
• Installation of Product
• Laboratory Controls
• Service
• Records and Reports
• Statistical Techniques
• Returned Goods
• Supplier Chain Management

Many experts would agree that these elements are good business practices, but I have found a number of companies that do not comply with these general requirements. Other companies comply with the mandates, but consider them to be regulatory requirements that must be met; thus, sustaining regulatory compliance is more difficult than it should be for these firms. Why?  Because these companies have two sets of objectives that must be met—one for regulatory and one for business—rather than one integrated and optimized set of objectives.

Let’s take some common business processes (shown below), and ask ourselves the following question: Could these business processes be effectively established and maintained through the document and data management system and change control processes contained within the QMS?

• Sales Process
• Accounts Receivable
• Accounts Payable
• Marketing
• Human Resources
• Business Acquisition Process

Here are some benefits that can be realized by companies that integrate their QMS and BMS: 

• Fewer and better optimized objectives;
• A more comprehensive management system;
• Better operational performance;
• A more interconnected workforce, as well as fewer operational silos; and
• More organizational agility along with a faster response to threats and opportunities.

Some of you might be wondering why I didn’t include improved market share or better bottom line among the benefits of a unified QMS-BMS. Unfortunately, both are difficult to achieve. I am generally familiar with the work of Phil Crosby and his “Quality is Free” concept as well as W. Edwards Deming’s Lean Six Sigma approach. But I contend it is difficult to show how an integrated QMS-BMS will improve the bottom line for any company. Although a Cost of Quality component within the BMS is a great start, it does not comprehensively link the impact of regulatory compliance to the bottom line, in my opinion.  And while an integrated BMS-QMS that yields the benefits shown above would positively impact market share, I don’t know of any metric that would quantify this effectively. 
 
Here are some common problems I have found with companies that have a separate QMS and BMS: 

• The regulatory and quality departments are not involved in “business meetings”
• Regulatory compliance is more difficult than necessary because compliance is considered “extra” work rather than “day-to-day” work 
• Regulatory compliance issues are tackled by the Regulatory and/or Quality departments
• Firing regulatory/quality leadership is a common solution to regulatory compliance problems
• The Regulatory and/or Quality department(s) function(s) as the regulatory police, trying to catch noncompliances and arrest the practice(s) that lead to the noncompliances
• Regulatory/Quality functions become significantly more important during regulatory inspections and post-market actions such as recalls
• Regulatory/Quality communications are poor

There is a palpable level of fear in the company because:

• Regulatory/Quality personnel are afraid they will miss some noncompliance and be blamed for it later
• Operations fears that Regulatory/Quality staff will find some noncompliance late in the process, causing costly delays in bringing a new product to market or recalling a product already on the market

Blueprint for a United QMS-BMS
What do you do if your company has not integrated QMS into the BMS? First, consider the risk associated with the integration. There is always risk associated with being a change agent within any company, even when that change could potentially be beneficial. Therefore, always consider the risk before taking any actions.

For top managers, a good first step is bringing other members of the executive team on board with the QMS-BMS integration. Non-managers should talk to their immediate supervisors about the idea. Next, determine the scope of your intended accomplishments and write them down (this is important even if you never plan to show the document to anyone).

An informal approach is best. Nemawashi is a Japanese word for the informal process of quietly laying the foundation for a proposed change or project by talking to the people involved, gathering support and feedback, etc. This step is considered an important element in any major change, before any formal steps are taken. Successful nemawashi enables changes to occur with the consent of all sides. If nemawashi does not seem appropriate, and a big project is considered not to be a realistic option, then start small—take baby steps. Success, even in small steps, begets further success.

Finally, establish SMART (specific, measurable, attainable, relevant, and time-bound) goals, and measure and report on the progress.

Building a quality organization can be a demanding task, but it’s well worth the effort in the long run. 

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James A. “Jim” Dunning’s consulting career began in 2001. He has provided quality and regulatory consulting services for various companies ranging from Fortune 500 medical device firms to startups. Dunning’s passion, however, lies with startups and small companies, especially those in regulatory distress. He has amassed significant experience in preparing 510(k) applications, developing complete Quality Management Systems, providing Quality System Training, and advising on quality, business, and leadership issues. Dunning is a senior member of the American Society for Quality (ASQ) and a member of the Regulatory Affairs Professional Society (RAPS). He can be reached at [email protected].