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  • 1.  Supplier Quality Agreement

    This message was posted by a user wishing to remain anonymous
    Posted 16-Apr-2024 09:15
    This message was posted by a user wishing to remain anonymous

    Hello Team, 

    We are class I medical devices manufacturer (Self Declaration) and buying most of parts from Asian countries. 
    Unfortunately, they are sending very good parts and we raised too many SCARs against them but things are not improving. 
    We didn't have separate Supplier Quality Agreement but have one of the section in General Supply Agreement below:

    Inspection; Acceptance and Rejection.

      1. All shipments of Products and performance of Services shall be subject to Purchaser's right of inspection. It is Purchaser's responsibility to perform incoming inspection in a timely basis (normally within 3 – 5 working days, subject to the volume) following the delivery of the Products at Purchaser's premise or performance of the Services to undertake such inspection. It is subject to Purchaser's discretion to carry out corresponding actions such as acceptance, rejection etc. based on inspection results. In general, Purchaser shall retain the right to reject any Products that are delivered in excess of the quantity ordered or are damaged or defective. In addition, Purchaser shall have the right to reject any Products or Services that are not in conformance with the Specifications, drawings or any terms of this Agreement. Transfer of title to Purchaser of Products shall not constitute Purchaser's Acceptance of those Products. Purchaser shall provide Supplier upon provision of inspection notice of any Products or Services that are rejected, together with the reasons for such rejection. Purchaser's inspection, testing, or acceptance or use of the Products or Services hereunder shall not limit or otherwise affect Supplier's warranty obligations hereunder with respect to the Products or Services, and such warranties shall survive inspection, test, Acceptance and use of the Products or Services.
      2. In case of defectiveness arises, upon mutual agreement, one or more of the following options will be adopted:
        1. Products will be rejected and full credit or refund of all amounts paid by Purchaser to Supplier for the rejected Products while it is at Supplier discretion to dispose the rejected Products at Supplier's cost; or
        2. Replacement Products to be received within the time period specified by Purchaser at supplier's cost, it is at Supplier's discretion to dispose the rejected products at Supplier's cost; or
        3. Repair or rework by Purchaser who will bill Supplier for all the direct and indirect costs associated; or
        4. Purchase from alternative source by Purchaser who will bill Supplier for the price variance if any.

    Supplier shall not deliver Products that were previously rejected on grounds of non-compliance with this Agreement, unless delivery of such Products is approved in advance by Purchaser, and is accompanied by a written disclosure of Purchaser's prior rejection.

    c.     It's the Seller's responsibility to notify the Purchaser prior to implementation of any changes that could impact the ability of the product to meet Purchaser's requirements.



    Do you think, above section is complete?
    If not, what I needs to add to push hard our suppliers? 

    Thanks



  • 2.  RE: Supplier Quality Agreement

    Posted 17-Apr-2024 15:17
      |   view attached

    Good afternoon, Anonymous.

    Full disclosure: I am a biotech compliance SME, not device. That being said, in addition to the attached white paper, I would like to make a few observations relevant to both drugs and devices.

    It is prudent to maintain Quality Technical Agreement (QTA) terms in a separate document from Master Service Agreements (MSA). The CFO should handle MSAs; the Head of Quality should handle QTAs. In all QTAs I have reviewed and/or prepared over the last 30 years, there is always a clause that reads "in all disputes related to quality, the terms of the QTA shall prevail". Financial issues, such as competitive pricing, etc. have no place in a QTA; they belong exclusively in the MSA. The QTA is incorporated into the MSA by reference only. 

    In a good QTA there is a matrix listing quality requirements and identifying who is responsible for each of the listed requirements; specific regulations are often cited as well. There are often quality requirements with joint responsibility. The matrix should be designed to facilitate identifying who is responsible for what quickly and easily. For drugs I typically set up the QTA matrix to touch upon all subparts of 21 CFR 211.

    One of the most important sections of a QTA is the definitions section. A QTA that simply reads "Supplier will notify Purchaser of serious deviations" is meaningless without first defining what constitutes a "serious deviation" as opposed to a deviation that is critical or one that is not serious. The lack of agreed upon definitions could result in significant misunderstandings and product quality issues.

    For situations where you do not have a QTA in place, I recommend insisting that one be implemented. A supplier who will refuse to agree to a QTA is not, IMHO, a supplier you really want to do business with.

    Best of luck,

    I always try to get a QTA in place before the MSA, as some requirements in a QTA may affect costs.



    ------------------------------
    Arvilla Trag RAC
    Principal Consultant
    CMC Compliance Services
    Iron River MI
    United StatesCMC Compliance Services LLC
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    Attachment(s)



  • 3.  RE: Supplier Quality Agreement

    This message was posted by a user wishing to remain anonymous
    Posted 22-Apr-2024 09:14
    This message was posted by a user wishing to remain anonymous

    Your response is very informative and quite helpful.

    Appreciated :)




  • 4.  RE: Supplier Quality Agreement

    This message was posted by a user wishing to remain anonymous
    Posted 22-Apr-2024 09:15
    This message was posted by a user wishing to remain anonymous

    Hello Arvilla,

    Do you think, we need to sign QTA with every supplier which is on ASL?
    If yes, how we can do with off shelf items suppliers such as Home depo (hardware providers)?

    As per understanding, we just need to selected suppliers after classifying them
    Like Tier A. Tier B suppliers only.

    What do you think?

    Thanks




  • 5.  RE: Supplier Quality Agreement

    Posted 22-Apr-2024 10:00

    Good morning,

    FDA appears to be placing more emphasis on supplier qualification and oversight, which means manufacturers must do the same.

    Per 21 CFR 820.50(a) "Evaluation of suppliers, contractors, and consultants. Each manufacturer shall establish and maintain the requirements, including quality requirements, that must be met by suppliers, contractors, and consultants. Each manufacturer shall:

    1. Evaluate and select potential suppliers, contractors, and consultants on the basis of their ability to meet specified requirements, including quality requirements. The evaluation shall be documented.
    2. Define the type and extent of control to be exercised over the product, services, suppliers, contractors, and consultants, based on the evaluation results. 
    3. Establish and maintain records of acceptable suppliers, contractors, and consultants.

    The only way to meet the requirements of (1) is to perform audits with predetermined quality criteria for the materials to be purchased and for the quality system of the supplier. To meet the requirements of (2), one must have a written quality agreement in place, and for (3) that quality agreement must be available for FDA review to demonstrate that (2) has been performed. This is reiterated in 820.50(b):

    820.50(b) Purchasing data. Each manufacturer shall establish and maintain data that clearly describe or reference the specified requirements, including quality requirements, for purchased or otherwise received product and services. Purchasing documents shall include, where possible, an agreement that the suppliers, contractors, and consultants agree to notify the manufacturer of changes in the product or service so that manufacturers may determine whether the changes may affect the quality of a finished device. Purchasing data shall be approved in accordance with § 820.40.

    In response to your question "[Do] we need to sign QTA with every supplier which is on ASL?" I refer you to the following web page on the topic: https://www.greenlight.guru/blog/supplier-management-medical-device. I have no idea how to deal with off-the-shelf items from Home Depot, except perhaps to discuss your requirements with Home Depot and determine what arrangements can be made to keep you in compliance.

    I hope this has been helpful,

     



    ------------------------------
    Arvilla Trag RAC
    Principal Consultant
    CMC Compliance Services
    Iron River MI
    United StatesCMC Compliance Services LLC
    ------------------------------



  • 6.  RE: Supplier Quality Agreement

    Posted 22-Apr-2024 10:52

    When the FDA promulgated the 820.50 purchasing controls regulations, it officially established that audits aren't necessary for every supplier. Instead, FDA says that such evaluation and assurance may instead be realized via, among other means, reviewing historical data, monitoring and trending, and inspection and testing. Moreover, FDA abandoned (deleted) an original attempt to require manufacturers to establish assessment criteria but asserted that the evaluation still must include a description how the assessment was made (according to what criteria or objective procedure) and that the results must be documented.

    Instead, when we evaluate and select potential suppliers, contractors, and consultants on the basis of their ability to meet specified requirements, including quality requirements, FDA deliberately intends flexibility in how we decide to evaluate the supplier's ability to meet our specifications.

    Defining the type and extent of control to be exercised doesn't necessarily require a written quality agreement.  Instead, FDA says that manufacturers must clearly define in the procedures the type and extent of control they intend to apply to products and services and that thus, a finished device manufacturer may choose to provide greater in-house controls (though in-house controls alone are general viewed as insufficient) to ensure that products and services meet requirements, or may require the supplier to adopt measures necessary to ensure acceptability.

    This flexibility is also why FDA does not require every supplier to have a quality management system.

    820.50(b) was originally proposed as "Purchasing forms" thereby giving some hints about its intended scope. But for added flexibility, FDA changed it to "Purchasing data" and allows purchasing data to include things like drawings, prints (or purchase orders) as long as the purchasing data clearly describe the product or service being ordered.

    Note also that the 820.50(b) element aimed at getting an agreement from suppliers to notify the manufacturer of changes is limited to those instances where such agreement is possible.  FDA acknowledges that such agreement may not always be possible and, in such cases, expects that alternative controls would be added (see aforesaid provisions for type and extent of control).

    When procuring product or services through a distributor (such as Home Depot) who is not the actual commodity source/manufacturer, you need to shift your purchasing/supplier control focus from the distributor to the commodity source/manufacturer.  That will connect you with the true quality-related attributes (e.g., material grade; trade name; certificate of analysis, MSDS, etc.) that you then use and consider when deciding on the type and extent of control.



    ------------------------------
    Kevin Randall, ASQ CQA, RAC (U.S., Europe, Canada)
    Principal Consultant
    Ridgway, CO
    United States
    © Copyright by ComplianceAcuity, Inc. All rights reserved.
    ------------------------------



  • 7.  RE: Supplier Quality Agreement

    Posted 22-Apr-2024 10:29

    I'm confused by one of sentences in your original post. It says, "Unfortunately, they are sending very good parts and we raised too many SCARs against them but things are not improving."

    The confusion is with the "they are sending very good parts" section. I infer it should have been something like, "they are not sending very good parts"

    A supplier quality agreement will not help. It doesn't address the cause of the problem, only adds more paper. FDA QSR does not require a quality agreement. ISO 13485:2021 requires one for outsourced process only and the Handbook says it can be the PO or the T&Cs; it does not have to be a separate agreement. Supplier quality agreements are useless as a way to improve quality. For a while they were a fad.

    There are two approaches to the problem. The first is to calculate the landed cost of the parts you receive from suppliers. This is all the costs you incur to get good parts into your warehouse. It includes the cost of the part, the shipping costs, the incoming inspection costs, the costs of processing a rejected lot, the cost of writing a SCAR, the costs of verifying the SCAR, etc. It is likely that these costs are large, probably three or more times is price on the PO. Companies often go to Asia thinking they are "low cost countries", LLCs. After you do the analysis, it will probably suggest that you need to find new suppliers. In terms of landed cost, domestic suppliers may be the best solution.

    For the current suppliers you need to understand the SCARs you have issued. Each one should have resulted in an investigation to determine the cause of the nonconformance and a corrective action so it doesn't recur. Your verification of effectiveness is that you don't reject lots at incoming inspection for this problem.

    Analyze the SCARs over the past, say, three years, to understand the nonconformances.

    If a supplier/part combination has a history of the same nonconformances, then the supplier is not serious about corrective action. Time to look for a new supplier.

    If a supplier/part combination has a variety of different nonconformances, then the supplier's production processes are not in control. Time to look for a new supplier.

    As part of the improvement process, have a conference call with the supplier. Explain the problems and ask them to put together a plan to resolve them. Put in periodic checkpoints on the actions and continue to monitor the incoming inspection results.

    In parallel, start to look for new suppliers.



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    Dan O'Leary CQA, CQE
    Swanzey NH
    United States
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  • 8.  RE: Supplier Quality Agreement

    This message was posted by a user wishing to remain anonymous
    Posted 23-Apr-2024 09:12
    This message was posted by a user wishing to remain anonymous

    Hello Arvilla, Dan, Kevin,

    Thanks for your wonderful feedback and suggestions. 
    Very informative and clear responses.

    Thanks - Appreciated