Supplier Quality Agreements (SQAs) are one of those ‘necessary’ pieces of work that many people haven’t heard about or seen unless their day jobs cross paths with them. On their face, however, they provide a principle-based contract for how the partnership/relationship between the Client company and the Supplier should take place.

As Australian/Irish politician Bryan O’Loghlen M.P. said, “A verbal agreement isn’t worth the paper it’s written on.” So, when undertaking a Supplier relationship, the Quality function at both companies (Client and Supplier) need to understand what each other are deeming essential and necessary, in addition to the basics of regulatory compliance for the goods or services which are provided.

The FDA defines Quality Agreements as, “a comprehensive written agreement between parties involved in the contract manufacturing of drugs that defines and establishes each party’s manufacturing activities in terms of how each will comply with cGMP.” These are legally-binding documents, and are often authored once all commercial agreements are in-place.

Why are Supplier Quality Agreements necessary?
Again, back to the principles. For a partnership to be effective, expectations and processes for high-quality outputs need to be clear. Industry expert Jamie Martin, observes that, “Poorly-defined roles/responsibilities will kill a partnership on the documentation side.” This is very true. Collaboration can iron-out a lot of issues, but a good RACI (Responsible, Accountable, Consulted & Informed) matrix can offset a lot of unintended gaffes. Martin adds, “Compliance is important, but so is efficiency—many times you’ll have to make decisions that impact clinical risk. Time is of the essence.”

Industry Quality Manager Kyle McCann agrees, and notes, “Explicitly stating what quality activities and documentation the Customer vs. Supplier is responsible for [on both sides of the relationship], and also agreements on a chain of events for when nonconformances occur so that there is no ambiguity out of what you expect from your Suppliers. This can include timelines for Deviations, CAPAs, audit findings, etc.”

What a Supplier Quality Agreement should include?
The basic elements are usually best and most salient, before getting fancy, and they include:

• Client and Supplier information
• Terms of relationship
• Governance / Communications (including escalations)
• Product Specification notice
• Compliance requirements (including audit amenability, etc.)
• Timelines (e.g., for Annual Product Reviews (APRs), Change Controls, Deviations, CAPAs, etc.)
• Reprocessing and/or other rework
• Production and in-process controls
• Storage and distribution
• Testing
• Contacts and responsibilities

This list isn’t meant to be exhaustive, and SQAs are written by each Client company so that they’re specific and relevant to what they need to occur. But this points to another important aspect of Supplier Quality Agreements: They need to be flexible to allow a balance of compliance and quality with the ability to actually conduct business operations. It is possible to write these on a spectrum, where at one end, anything goes. And at the other end, nothing goes. Pursue either side of this distribution at your own peril. Seeking a ‘zero-variance’ relationship can be as problematic as one where controls aren’t stringent enough. This is also why Governance and Communication cascades should be spelled-out in the Supplier Quality Agreements—when things go awry, knowing ‘how’ escalation happens and how issues will be resolved can pre-empt a lot of headaches later.

Quality is about predictable outputs
If we think about the nature of Supplier Quality Agreements as a Culture of Quality element, what we’re really looking to do is restrict the ‘degrees of freedom’ of acceptable behaviors in such a way that the end result translates into more compliant and more ‘in-control’ processes (Figure 1). From the perspective of statistical process control, greater variance leads to more noise and unstructured outputs, which can be difficult to explain later. When supplier activities are locked-down, it helps to embody more of a Quality-by-Design (QbD) situation where outputs become more consistent and predictable. And as the saying goes, ‘a well-designed process will deliver what it’s designed to deliver, good, bad, or indifferent.’ It’s in this way that Quality Agreements actually help Suppliers make their internal processes even more robust and consistent to conform to each of their Clients’ needs vis-à-vis the Supplier Quality Agreements.

Supplier Quality Agreements really are documents to codify relationships. The expectations on both sides have a better chance of succeeding, and both sides’ teams have a better chance of negotiating better outcomes by having SQAs in place. And as Louis Pasteur noted, ‘Chance favors only the prepared mind.’ 

---

Ben Locwin
Contributing Writer, Industry Executive

Ben Locwin has held executive roles in Quality and Compliance, and has helped to create better systems for better Quality across the industry. Quality should never be left to chance. If that’s what your organization is doing, chance will eventually win-out to your disfavor every time.