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WHITE PAPER

Analytics in Supplier Quality


Management
We create new opportunities for our
clients by harnessing our passion,
talent & innovation
Knowledge sharing initiative by
Healthcare Life Sciences
MD&D Practice

Author: Ketaki Soman
Co-Author: Sarvesh Bhise
2

Table of Contents
1. Executive summary .................................................... 3
2. Introduction ........................................................... 3
3. Current Use of Supply Chain Analytics ............................. 4
4. Regulations Governing Medical Device Suppliers ................. 4
5. Supply Chain Complexity and Analytics ........................... 5
6. 8 Levels of Analytics .................................................. 6
7. Solution Characteristics and Features ............................. 6
8. Conclusion .............................................................. 7
9. References .............................................................. 7




2014 Syntel, Inc. Analytics in Supplier Quality Management
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Executive Summary
Medical device manufacturers deal with a large number of suppliers and contract man-
ufacturers in order to combat the increasing pressure of reducing inventory and costs.
Further, supplier and contract manufacturer management is becoming increasingly dif-
ficult not only with respect to the quality but also from the regulatory standpoint.
Disparate quality management systems across the supply chain lead to miscommunica-
tion across the supply chain.
Active and effective use of analytics which extends beyond the boundaries of organiza-
tions and connects all partners in the supply chain can be a potential solution to solve
issues related to supplier quality.
This whitepaper analyses the following:
Supplier quality issues in the medical device industry
Improving supply chain efficiency through analytics
Current market and regulatory perspectives related to supply chain
Characteristics of analytics solution for supplier quality management.

Introduction
The medical device industry is struggling, with a forecast of single-digit overall
growth for 2014.
[1]

Device-makers rely on hundreds or thousands of suppliers to always deliver the
right materials on time and per specifications so as to minimize inventory and en-
sure continuous improvement to operations, quality and bottom line.
[2]
Some de-
vice-makers have as many as 400 outsourced contract manufacturers and sup-
pliers.
[1]

Thus, medical de-
vice supply chains
are becoming more
and more complex
and there is expan-
sion in regulatory
scrutiny.

The graph to the
right highlights the issues due to
inadequate supplier quality man-
agement.
Further, since 2012, 12% of CDRH
(Center for Devices and Radiologi-
cal Health) warning letters issued to
Medical Device companies cited
purchasing control issues.
[3]





2014 Syntel, Inc. Analytics in Supplier Quality Management

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Supply chains account for more than 40
percent of medical-device costs. The an-
nual spending is so vastabout $122 bil-
lionthat even minor efficiency gains
could free up billions of dollars for invest-
ments elsewhere.
The improvement from better-performing
supply chains would range up to 20 per-
cent for producers of devices and medical
supplies.
[4]

The performance of organizations is correlated to analytics as it has been demon-
strated that organizations that lead in analytics outperform those who are early
adopters of analytics by a factor of three to one.
[5]

Active and effective use of supply chain analytics by medical device companies
could thus increase efficiency which would translate to major cost savings as
shown above.


Current Use of Supply Chain Analytics
Just under three-fourths (73 percent) of
the executives surveyed mention that sup-
ply chain analytics tools are important to
meeting their company goals.


Further, 73 percentplan to upgrade or
replace analytics tools within two years to
gain more predictive ability.
[6]




Regulations Governing Medical Device Suppliers
Managing and maintaining supplier data is already a requirement of 21 CFR 820
of the U.S. Food and Drug Administration's cGMP (current Good Manufacturing
Practices) requirements and Quality System Regulations (QSR).
[7]
The FDAs
QSR explains how a device manufacturer must manage suppliers. This ranges
from supplier evaluation and selection to control methods.
[8]

The following sections of 21 CFR 820 relate specifically to supply chain:
21 CFR 820.50: Purchasing Controls and has sub-sections as below:
21 CFR 820.50(a): Evaluation of suppliers, contractors, and consultants with
respect to their conformance to specified requirements, including quality re-
quirements.
21 CFR 820.50(b): Purchasing data e.g. supplier agreements.
21 CFR 820.80 (a): Receiving Acceptance Activities including inspections,
tests, or other verification activities.
Further, the records relating to these regulations have to be established and main-
tained.
[9]

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ISO 13485: 2003 Sec. 7 (Product Realization) clause 7.4.1 requires that device
companies have a procedure that includes the following 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
[10]



Supply Chain Complexity and Analytics
Companies consider alignment between partners in the supply chain as the most
important factor.
[11]

83% of finance business partners and 87% of supply chain business partners
agree that data and analytics present an unprecedented opportunity to drive a
more collaborative, business partnering relationship with the supply chain.
[12]

Delay to market and non-compliance are just two of the possible negative out-
comes with the slow, burdensome paper-based processes that tend to prevail in
the medical devices industry. Software that ties together the information sharing
requirements of the various departments within a device company has shown to
reduce development costs by as much as 25 percent and reduce time to mar-
ket by a staggering
40 percent.
[13]

Leading companies
are able to better
manage risk and
gain competitive
advantage by in-
vesting in extending
the quality enter-
prise to include sup-
pliers and contract
manufacturers as
shown besides:
[14]

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8 Levels of Analytics
Levels of analytics from the simplest to the most advanced, as a spectrum
where competitive advantage increases with the degree of intelligence. These
levels are as follows:

1. Standard reports which are generated on a regular basis and describe just
what happened in a particular area.
2. Ad hoc reports are custom reports which help to find answers to some
questions.
3. Query drilldown (or OLAP) allows a little bit of discovery by manipula-
tion of the data to find out answers to pinpointed questions.
4. Alerts point out when there is a problem and help to notify when something
similar happens again in the future. Alerts can appear via e-mail, RSS feeds
or as red dials on a scorecard or dashboard.
5. Statistical Analysis includes some complex analytics, such as frequency
models and regression analysis. These help to look at why things are hap-
pening using the stored data and further to answer questions based on the
data.
6. Forecasting which identifies trends and pattern recognition.
7. Predictive Modeling helps to take data driven decisions.
8. Optimization takes resources and needs into consideration and helps to find
the best possible way to accomplish goals.
[15]



Solution Characteristics and Features
The analytics solution has the following characteristics and features which help
to provide the competitive advantage:
Flexible system that connects and automates quality related activities
throughout the organization.
Quick identification and resolution of issues - The system enables quality
issues to be quickly identified and resolved centrallyacross global opera-
tions and into the supplier network. By identifying and resolving quality is-
sues quicklyno matter where they ariseit reduces downtime, helps ex-
ceed customer expectations and continually improves product quality.
User-configurable built-in dashboards, metrics and ad-hoc reporting/
query functionality that allow for real time trending and analysis.
2014 Syntel, Inc. Analytics in Supplier Quality Management
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Automatic escalation and notification system with established business rules
and workflows ensure timely escalation and notification of high-risk incidents
before they become big problems. Suppliers can then respond to issues and re-
solve problems faster.
Supplier Qualification Management of qualification and approvals of new
suppliers, including all necessary qualification steps, which may vary based on
the suppliers risk assessment, and may include tasks such as tender process,
analysis and certificate processes, self-assessment, on-site audit, and others.
Supplier Audits Management of different kinds and frequencies of audits
based on the risk level and the supplier rating or score established in a suppli-
ers profile
Raw Material / Incoming Inspections Creation of inspection records to en-
sure appropriate tracking of all inspection activities.
Supplier Non-conformance Generation of Non-Conforming Material Re-
ports (NCMRs) from the inspection record or independently.
Supplier CAPAs Tracking all supplier corrective and preventive actions
through completion.
Supplier Score Cards which help to easily manage supplier base using infor-
mation specifically related to each supplier contained in the quality manage-
ment system, such as non-conformances, audit findings and supplier CAPAs, as
well as information from an ERP or data warehouse and monitor their perfor-
mance with scorecards. Supplier Scorecards automatically track and rank sup-
plier performance using trending and analysis of supplier KPIs to make evalua-
tion easy.
[2],

[16]


Conclusion
Abundant data can be converted into a competitive advantage with the help of ana-
lytical capabilities found with modern software solutions which help to deliver
dramatically more actionable intelligence while requiring only a fraction of the
resources.
[17]

Better supplier data will save money through fewer supplier problems and better
use of finite supplier quality resources.
Problems detected early are less expensive to deal with. Good supplier data will
allow a company to right-size the amount of oversight required at a given supplier:
more at strategic and problematic suppliers and less at stable, non-critical suppli-
ers.
Effective supplier management can thus help prevent problems and reduce their
impact should they occur.
[7]

References
1. PRWeb, 2014
2. Increasing Regulatory Scrutiny in the Medical Device Supply Chain, 2013,
PwC
3. Ebel T., Larsen E. and Shah K., 2013, Strengthening health cares supply
chain: A five-step plan, McKinsey Insights
4. Supply Chain Innovation Driving Operational Improvements, 2013, SAP and
2014 Syntel, Inc. Analytics in Supplier Quality Management
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Bloomberg Business week Research Services
5. Pearce G., 2014, Struggling with supplier data - what it is, where it is, and how
to get the most out of it, SQA Services, Inc.
6. Medical Device Supplier Quality Agreements, Global Compliance Panel
7. 21 CFR 820, FDA
8. Lane B., Supplier Quality Agreements: Benefits to You and Your Supplier,
GxP Lifeline, MasterControl Inc.
9. Making the right risk decisions to strengthen operations performance, 2013,
PwC and MIT Forum for Supply Chain Innovation
10. Partnering for performance: Part 1: the CFO and the supply chain, 2013, Ernst
& Young
11. Software Trends in the Medical Device Industry, 2013, MasterControl Inc.
12. Four Best Practices To Improve Quality In The Supply Chain, Sparta Systems
13. Eight Levels of Analytics, SAS Analytics
14. Supplier Quality Management (SQM): Extending Quality to Global Supplier
Networks, AssurX, Inc.
15. Roberts M., 2014, Delivering Actionable Intelligence with Global Manufactur-
ing Analytics, Supply Chain Minded
2014 Syntel, Inc. Analytics in Supplier Quality Management