November 6, 2013 Purchasing Controls & Supplier Quality Best Practices Beyond Compliance for the Medical Device Industry AdvaMed 2013 Bernie Liebler Technology and Regulatory Affairs

Background There is increased concern over supplier quality due to:  Increased number of recalls & enforcement actions  Purchasing controls (21CFR ) is number 7 of top 10 cited FDA 483 observations for quality system violations  Increasing dependence on global outsourcing  Increased need for collaboration and sharing best practices to improve supplier quality within medical device industry Ravi Nabar, Ph.D., Sr. Director Supplier Quality Management

Value Proposition & Approach  This document highlights a set of successful practices in supplier quality and purchasing controls  These practices represent the collective consolidated peer-reviewed inputs of AdvaMed’s membership  Our approach is to publish these via a Library of “Successful Practices” for medical device OEMs and suppliers  The Implementation of these practices is expected to:  Improve Quality from suppliers (reduce escaping defects)  Reduce costly supplier-caused recalls  Reduce risk to patient safety from purchased components Ravi Nabar, Ph.D., Sr. Director Supplier Quality Management

 The regulatory framework for these good practices is:  21 CFR Part (Purchasing Controls),  21 CFR Part (Acceptance Activities),  21 CFR (Design Controls)  Preamble to 21 CFR 820 (Purchasing Controls relevant sections), and  ISO (Sec 7.4)  The guidance framework for these good practices is: GHTF N17 (now under the auspices of IMDRF) Framework Ravi Nabar, Ph.D., Sr. Director Supplier Quality Management

Purchased Part Planning (GHTF 3.1) Rank risk associated with the Purchased Part  Part Classification/criticality is obtained from Design Outputs (820.30)  Identify design aspects of Critical parts that are Critical to Quality (CtQs) (820.30)  Identify CtQs for manufacturing parameters of critical processes  Receiving Inspection/Acceptance Requirements  Establish Mechanism for CTQ Cascade to Suppliers (for part and process CTQs)  Establish process to ensure that specifications provided a supplier are complete, accurate and correct. Identify Criticality of Service (820.50)  Identify aspects of the service that are Critical to Quality  E.g., Sterilization, calibration, etc. Ravi Nabar, Ph.D., Sr. Director Supplier Quality Management

Evaluate and Classify Supplier Risk (820.50)  Supplier Risk Classification of prospective suppliers based on  Purchased Part Classification, Supply Risk, Business Risk  Instructions on a form lead systematically to supplier classification/risk ranking (820.50) Establish a process for Supplier Relationship Management  Supplier Relationship Management  Focus on contract manufacturers & specified component suppliers  Establish formal and informal Supplier feedback mechanisms Supplier Planning (GHTF 3.1)

Documented Supplier Selection Requirements (GHTF 3.2)  Evaluate supplier capability to meet requirements  Conduct x-functional documented capability assessments  E.g., include financial, technical, operational capabilities Supplier Evaluation & Acceptance (GHTF 3.3)  Documented policies, e.g., Establishing an Approved Supplier List (ASL)  Supplier audits (including critical manufacturing process quality)  Provisions for evaluating 3 rd party suppliers, Distributors, Brokers Supplier Selection, Evaluation & Acceptance (GHTF 3.2 & GHTF 3.3) Ravi Nabar, Ph.D., Sr. Director Supplier Quality Management

Finalization of Supplier Controls (GHTF 3.4)  Supplier Minimum Quality Requirements  Supplier Quality Agreements (with critical/key suppliers)  Ensure procedures and Quality Agreements address sub-tiers  Prints and specifications control/define expectations  Established Supplier Change Management process  Purchased Part Approval & New Product Introduction process  Established risk-based process for Outsourcing  Established process for quality of Service/spare parts  Supplier Performance Monitoring (monthly)  Ensure supplier process validations for custom critical components  Established supplier standards for data security  Establish methodology for software supplier qualification  Established process for qualifying Brokers & counterfeit risk management  Establish process to ensure that specifications provided a supplier are complete, accurate and correct. Ravi Nabar, Ph.D., Sr. Director Supplier Quality Management

Supplier Performance Monitoring  Routine Performance Monitoring (e.g., monthly or based on volume/frequency)  Established Acceptance activities  Track and trend Incoming & In-process non-conformances  Use a statistical approach for sampling (not automatic "dock to stock")  Establish a consistent audit process  including Process Quality audits to reduce escaping defects  Criticality of supplier determines the type of auditing required (e.g., on-site audit)  Supplier Corrective Action Requirements (SCAR) Established  Approach as a CAPA sub-process  template provided to guide supplier through failure investigation process  Recorded training on failure investigation and SCAR’s available to suppliers Delivery, Measurement & Monitoring (GHTF 3.5) Ravi Nabar, Ph.D., Sr. Director Supplier Quality Management

Supplier Feedback & Communications (GHTF 3.6) Business (Quality) Review  Routine Supplier Quality Business Reviews (internal & external)  Ensure supplier relationship is maintained with transparency  Include SCAR & CAPA review, tracking & trending data from Acceptance Activities  Scorecards of supplier performance history is shared  Collaborate with suppliers on reducing Cost of Non-Quality  Supplier Development Programs including implementation of Lean methodology  Collaborate with suppliers on new product/process innovation  Collaborate with other OEM’s on supply chain oversight (e.g., MedAccred, Rx-360)  Establish Supplier communications via hosted supplier day, or via internet media Ravi Nabar, Ph.D., Sr. Director Supplier Quality Management

Questions? Thank You Ravi Nabar, Ph.D., Sr. Director Supplier Quality Management