4 Ways to Reduce Risk in Contract Manufacturing

By ETQ on September 8, 2015

A survey published in Pharmaceutical Outsourcing magazine reveals growing demand for contract manufacturing in the pharmaceutical industry, with over 75% of respondents indicating that they outsourced the same or more than in previous years.

The trend is also growing in the medical device industry, and it’s easy to see why. With intense competition, contract manufacturing lets companies shrink time to market for new innovations, reducing production costs and enabling sharper focus on the brand’s core competencies.

At the same time, working with a contract manufacturer isn’t without risk. How can you be sure the contract manufacturer will deliver on your brand’s quality promise? It’s a huge question mark, given that defects in finished devices or pharmaceuticals can have a big impact on a company’s reputation.

Reducing risk in the supply chain isn’t always straightforward, but there are several core strategies you can adopt to lower your overall risk profile to ensure safe, high quality finished products.

Involve Suppliers in the Quality Process

The most important step in reducing risk around contract manufacturing is to involve suppliers in the quality process. Some companies are hesitant to give suppliers full access to their Quality Management System (QMS), and that’s totally understandable. However, you can give contract manufacturers restricted access to the QMS that will enhance visibility and improve quality outcomes.

Applications in the QMS that let you extend quality management down the supply chain include:

  • Corrective ActionsAssigning Corrective Actions to suppliers from the QMS lets you quickly respond to quality issues with contract manufacturers. It also gives your suppliers critical information within their overall Supplier Rating that helps them stay competitive with you as a vendor.
  • Change ManagementSometimes change requests arise that necessarily involve the contract manufacturer. The QMS allows you to easily track the status of the change, helping avoid project delays and mistakes.
  • Production Part Approval Process (PPAP): This makes it easy to verify that any components and sub-systems you receive from contract manufacturers comply with your design specifications.

More than just the details, integrating suppliers into the QMS offers another strategic benefit—it also lets you involve contract manufacturers in early stages of the design process. In many cases, contract manufacturers can provide important expertise at this stage that results in stronger and more profitable products.

Supplier Quality Agreements as a Compliance Tool

supplier quality agreement is a legally binding agreement that outlines the responsibilities of the contract manufacturer, focusing on quality outcomes and regulatory compliance of manufactured products. These agreements are becoming more common in contract manufacturing because they give companies a way to ensure supplier quality and demonstrate regulatory compliance to government agencies.

Your QMS is what gives you the visibility to see that contract manufacturers meet your company’s quality standards, also giving you a framework to enforce the agreement. Now let’s look at the tools you’ll use to evaluate contract manufacturers.

Robust Reporting

Having a solid set of Centralized Reporting tools is fundamental to evaluating supplier quality outcomes. After all, you can’t improve on what you don’t measure. The QMS gives you many different tools you can leverage to monitor supplier quality, including:

  • Monitoring trends in Supplier Ratings to evaluate performance over time
  • Using reporting tools to tracking the source and costs of problems
  • Setting up quality alerts so you get notified of issues in real-time, or even before they occur

Reporting often brings to mind nightmarish journeys into Excel, but a flexible QMS makes it easy. That means common report templates, presentation-ready reports made in just a few clicks and even report views embedded into dashboards that give you an instant snapshot of quality trends.

Make Risk-Based Decisions

The final element in reducing risk associated with bringing on contract manufacturers is to take a Risk Management approach. Risk is widely accepted as the universal language of compliance, and QMS technology now lets you incorporate risk at multiple levels of the quality process.

For instance, you can assign risk levels to Corrective Actions and Customer Complaints, which can be useful in sourcing decisions if certain suppliers are responsible for a large number of high-risk items. Another example would be using risk within Change Management initiatives, which would help you make choices that present the lowest risk to the company.

Integrating suppliers into your quality process, better reporting and quantified Risk Assessment are all important tools for reducing risk. Ultimately, taking charge in these areas provides a critical advantage in making your company more profitable and competitive when working with contract manufacturers.