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Supplier Quality Agreements Are Not Just a Handshake Anymore

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You’re only as good as the products and services provided by your suppliers. You know this. When your suppliers ship your company substandard products and provide atrocious customer service, it could be a sign that your purchasing and quality organizations must now spend a lot of money, commit human resources and waste precious time to qualify another supplier. But, hold on. This understanding and enabling of quality requirements is partly your responsibility, as well.

This is a perfect example of the “two-way street” that we all travel on from time to time. The logistics of this precarious journey can be simplified and readily defined by putting pen to paper, sitting down in a prearranged meeting with each of your critical suppliers and discussing your relationship in real and agreed-upon terms. A requirements review, if you will. The deliverable is a supplier quality agreement (SQA) between two interested parties that outlines exactly what these requirements are, how the customer will “get what you bargained for” and how the supplier gets compensated for what your company requires. Purchasing controls is the one key process in the quality management system that directly combines the regulations and standards with business (dollars and common sense).

As with any regulated industry, your company should have procedures in place that include the following requirements concerning purchasing controls and the development of a SQA to:
• Ensure that purchased products and services conform to documented requirements
• Establish criteria for selection, evaluation and re-evaluation of suppliers
• Evaluate suppliers on their ability to meet the established criteria for product and quality requirements
• Define type and extent of control based on documented evaluation of the supplier
• Maintain records of supplier evaluations and agreements
• Develop and enable a “no change” agreement

These procedures or work instructions should clearly indicate which suppliers are required to have SQAs and which should only be considered for these types of agreements. The procedure should also specify the contents of SQA and who has responsibilities for creating, approving and changing these agreements. You’ve heard this before. It’s based on risk. Minimally, quality and purchasing controls process owners should approve of these agreements. The number of approvers should be kept at a minimum so that the agreements can be kept flexible enough to be kept up-to-date as experience and events decree. Although your procedures should spell out the areas that should be covered in a SQA with a supplier, these agreements should always be established jointly between your company and the supplier. Neither party should take anything for granted. These agreements are a productive tool to help both you and the supplier understand your roles and responsibilities and to foster good communication between the two of you. Your company should agree with the critical supplier on individual responsibilities and deliverables. Although you, the manufacturer, are ultimately responsible for the medical device, the supplier also has certain obligations to meet and exceed the customer’s requirements every day of the week.

Let’s Get Serious

The Food and Drug Administration’s (FDA) Center for Devices and Radiological Health has been emphasizing to all device manufacturers that they must assume the responsibility for every step of the global administration of purchasing controls. Current recalls of medical devices due to failures of components, raw materials and services supplied to device manufacturers provoked FDA’s increased analysis of supplier purchasing controls about six or seven years ago. FDA inspections and ISO audits still put increased emphasis on challenging your company’s supplier quality management system, in terms of the agreements formally put in place to control procured products and services. Your company must verify that purchasing documentation, including (where appropriate) the requirements for approval of product, procedures, processes, equipment, qualification of personnel and other quality management system requirements. The objective evidence starts with producing a formal agreement between the two parties. Formal not only means in writing and signed, but also, by definition, binding. Additionally, there must be detailed assurances in place to show that purchasing documents contain, where possible, an agreement that the supplier will notify the manufacturer of changes in products or services that may affect the quality of a finished device [21 CFR 820.50(b)].

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