Risk Management greatly reduces inefficiencies resulting from unanticipated operational disruptions.

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For regulated organizations, quality problems & non-compliance have serious consequences

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An integrated and effective quality system is key to improve efficiency & compliance in manufacturing operations.

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Posts Tagged ‘supply chain’

Supply Chain Management Is a Big Target for the FDA

Thursday, December 15th, 2011

By: Mark Crawford

According to Alan Schwartz of mdi Consultants Inc., a former supervisor of field operations for the FDA, supply chain oversight is the FDA’s next big area of concern.

About a year ago the FDA indicated plans to expand its enforcement reach over foreign device suppliers through consent decrees. The FDA also asked manufacturers and importers to assume a bigger role in managing their supply chains. An FDA spokesperson, compliance officer Carmelo Rosa, further stated that “currently the agency only has authority to establish import alerts for foreign companies with good manufacturing practice violations, but is looking at other options.”

“This is an interesting statement and if the FDA takes it seriously, it will start a new compliance incentive to shore up our borders and to prevent the entry of ‘adulterated’ devices,” says Schwartz.

Could the FDA actually take injunctive actions or civil penalties on foreign medical device manufacturers?

Probably not, says Schwartz, because the FDA does not have legal jurisdiction over foreign companies.

However, the FDA import alert does essentially impose a consent decree on the foreign manufacturer (the FDA can issue an import alert without visiting the foreign manufacturer’s site). If this happens, according to Schwartz, the following stipulations could be required before shipments enter the U.S.:

• Private laboratory testing of each shipment
• A copy of the foreign company’s quality system for the FDA to review
• A third-party audit for QS compliance

Previously, the FDA has not viewed initial importers as having any regulatory responsibility for the products they import—under new regulations, however, this is starting to change.

“Initial importers are subject to Medical Device Reporting (MDR) under 21 CFR 803, Reports of Corrections and Removals under 21 CFR 806, and Medical Device Tracking under 21 CFR 821, if applicable,” says Schwartz. “Under the MDR regulations, importers are required to report incidents where a device may have caused or contributed to a death or serious injury as well as report certain malfunctions. The importers must maintain an MDR event file for each adverse event. All product complaints (MDR and non-MDR events) must be forwarded to the manufacturer. Under Medical Device Tracking requirements, certain devices must be tracked through the distribution chain.”

It is evident initial importers have very little responsibility for the devices they import and distribute. It is the foreign manufacturer/exporter that has the regulatory responsibility (510(k) standards, FDA registration and listing) and providing the assurance that the device is manufactured in FDA QSR/cGMP compliance.

It is increasingly likely the FDA will expect initial importers to be responsible for the quality of the devices they intend to import, even though they do not control the specifications, changes to the design, manufacturing, and any corrective actions made by the manufacturer.

“With this line of thinking, it is possible that if a device that is distributed is involved in a field correction and/or recall, the company that put that device on the market could be held responsible for the regulatory consequences, especially if this is a recurring event,” warns Schwartz.

To mitigate this risk, Schwartz recommends the following be addressed in an agreement with the contract manufacturer:

• Require registration with the FDA of all foreign medical device manufacturers who export to the USA

• Require the manufacturer to have a comprehensive quality system that is compliant with QSR/cGMPs regulations and that is documented; also, if there are intentions to sell to the European Union and/or Canada, the company must be ISO 13485 certified and must also be certified to Canadian standards.

• The contract manufacturer will notify the importer of any past FDA regulatory actions, FDA 483 observations or warning letters that were issued, in addition to any pending or ongoing FDA investigations

• The manufacturer will notify the importer when they are expecting an FDA inspection of their operations

• The manufacture will notify the importer if they have received any written notifications from the FDA

• The manufacturer will be notified in writing if there are any changes in any of the device raw materials or specifications, prior to making these changes

• If a potential problem is found concerning the manufacturing process that may have affected the finished medical device(s), the importer will be notified immediately

• The manufacturer must notify the importer if there any reported problems on their devices that they distribute in other countries that may affect the importer’s devices

• The manufacturer ensures that it has an enforced insurance policy

• As part of its quality system compliance, the contract manufacturer must make sure that all automated processes have been validated

• The software in the operating systems of manufacturing equipment has been validated

• The importer is allowed to audit the operations for QSR compliance

• The importer is allowed to watch the manufacturing operations of its devices with unannounced visits

“It would appear that the least burdensome way for the FDA to increase its scrutiny on imported devices is to enforce device quality at the importer level,” concludes Schwartz. “Therefore initial importers should be prepared for a higher level of examination if problems arise that could possibly end up in warning letters and/or injunctions.”

Alan P. Schwartz of mdi Consultants, Inc. in Great Neck, New York has been providing strategic planning on FDA regulatory compliance issues since 1978. Contact Schwartz at 516-482-9001 or alan@mdiconsultants.com.


Managing Quality, Compliance and Risk in a Global Economy

Friday, March 11th, 2011

Time to market is one of the major reasons we look to the global economy. Acquisitions and mergers can take us across international borders to quickly gain the intellectual property we need. International supplier sourcing can get products more quickly to our manufacturing sites and our customers, or broaden our foot print in a country quicker and faster.

 While the global economy can help us realize productivity gains, we need to carefully manage it so operational excellence across the value chain can be realized. As manufacturers, we got really good at managing our domestic raw material suppliers and our own factories who were supplying our local customers…but remember, it took us years to get this down and develop systems.

 The strategies that we have to embrace has our organizations focusing on reducing risk from the highest enterprise-level risk down to managing supply chain risk. There is expanding quality focus as we grow our customer base and enter new markets. We will have to stay compliant as the regulatory/quality requirements are constantly evolving, putting an increase on internal global procurement policies and tighter controls and practices on supply chain management.

 As we build these complex value chains we have different types of relationships:

 • Suppliers & Customers in any country

• Private Label Manufacturers

• Contract Manufacturing Operations (CMOs)

• Local and International Distributors

• Outsourced Development (R&D)

• Outsourced Services: sterilization, distribution, packaging, Regulatory  Services, etc.

• New Technologies & Acquisitions

 Each of the different suppliers determines different types of communication and responsibilities that have to be sorted through to ensure the appropriate control of the interactions of the relationships.

 Some of the supply chain problems we have with our global suppliers are the same as what we had 20 years ago with local suppliers. They do not have the technology nor the business processes in place to quickly manage the needs the OEM has to put on them, to find and manage information. We need to think of sharing information with customers and suppliers and we need to make that process more efficient.

 With paper-based solutions, the increase of suppliers and monitoring quality, performance with supplier systems becomes even more challenging. Minimizing the risk of liabilities, manufacturers need to have global visibility into their supplier performance across the entire organization and all their product lines to ensure consistency, quality control and compliance.

Based on your supplier relationship, you should develop a Supplier Contract so you can define your expectations of each customer and supplier throughout your value-chain. This will detail what you are both going to do and when you will do it when that “event” occurs. Because you know it will – it’s just a matter of when it will.

 So what’s needed to help you manage the business processes that you are going to have to “control” and to ensure “compliance” between both your suppliers and your customers? A top-down architectural approach to compliance and quality for any business process that you need to “integrate” between your customer or your supplier, so that it is flexible enough to allow for continuous improvement. Plan – Do – Check – Act.

 A flexible approach can help enforce compliant process performance and control; monitor information accurately and in a timely manner for decision support; support change management throughout the value chain; be supported by metrics to mold culture and behavior; sense and respond to nonconformances as they occur; have procedures to correct problems that result; and, have the tools and processes to prevent the problem from recurring by improving design or process. In doing so, it can provide a framework for continuous “real time” assurance of quality, compliance and continuous improvement to help achieve operational excellence.

 We need to maintain close relationships with our suppliers’ Quality systems because ultimately, we are responsible for the entire product quality. Look across your supply chain and see what technology your suppliers’ are using, and then look to see where you can automate your business processes and integrate so that you can get access to real-time information. And finally, leverage a business intelligence tool so that you can pull information from various data sources to get the types of metrics and analytics that you need to make the right decisions at the right time.


Are They Just Pulling Our (Supply) Chain?

Thursday, July 15th, 2010

The FDA, Congress, the US Consumer Products Safety Commission, US Immigrations and Customs Enforcement, the Department of Justice. These and countless other regulatory bodies are more proactively evaluating the potential risk and liability to our country’s goods and products; and as we’ve seen, the sharing of information among these regulatory bodies is leading to more cohesive enforcement activities with the continuous goal of protecting the consumer.

For the consumer, this is great news: increased regulatory enforcement in the name of consumer protection. For the manufacturers, however, the perception has long been that facing broader, stronger enforcement represents increased operational costs, complicated administrative processes, and for many, a major headache.

On the flip side, sitting passively in hopes their number doesn’t come up (surprise inspections, bad press, recalls, even bankruptcy) is likely to induce more than a migraine, but full-scale disaster. More and more manufacturers are sensing that they’d better keep a close eye on their operational risk factors. And this includes not only in-house operations but their full-scale supply chain. To the consumer, the top of chain ultimately liable for what happens along the way up.

So are the regulatory agencies just pulling our chain in the name of consumer protection, or should we, as a nation of manufacturers, really be sharpening our focus on supply chain issues?

For those that choose to ignore the risks and maintain a myopic view of their operations, all they have to do is take even a blurred look at what’s been going on out there in just the past few months to know how critical it is to shore up their entire team:

  • Johnson & Johnson has been hit with five lawsuits seeking class-action designation in the wake of its recall of OTC children’s medications. The voluntary recall by J&J subsidiary McNeil Consumer Healthcare was the company’s third recall in an 8-month period due to quality problems, prompting the FDA to look into hundreds of adverse events, including 37 deaths linked to recalled products. One complaint stated: the company’s action clearly shows “an utter disregard for the safety and welfare of the children who use their products.”
  • Wegmans Food Markets replaced its supplier of store-brand dry pet foods because of “a disappointing relationship with the previous supplier, including recalled products due to a strain of salmonella found in (the supplier’s) facility.
  • A multitude of major product recalls by Toyota (and its luxury Lexus brand), in particular, the largest resulting from the stuck accelerator situation, have tarnished the company’s previous stellar reputation as a producer of reliable vehicles. CTS Corporation of Elkhart Indiana, the supplier that produces the accelerator assemblies for Toyota stated in a press release issued on its web site that an accelerator friction problem accounts for just a few cases of stuck accelerators. CTS noted that its products are not implicated by the November 2009 Toyota recall, but further states “that CTS has been actively working with Toyota for awhile to develop a new pedal to meet tougher specifications from Toyota.”

So who’s to blame in these and countless other reported scenarios of potential and realized consumer harm – spinach, peanut butter, ground beef, defibrillators, baby formula, Heparin? There are so many potential parties as fault, particularly among complex, multi-tiered, global supply chains. Yet, no matter how far down the chain, it’s the manufacturer whose name is on the label that takes the blame.

So, no, those regulators aren’t just pulling your chain. They mean business. And those manufacturers who don’t want to see their profits or their operations get washed down the drain, will have to respond to the growing pressures from these bodies to develop, implement, and maintain a supplier management program that integrates compliance, oversight, and strong supplier relationships into business practices and quality systems.

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