Best practices in supplier qualification and supply chain protection

Supply chain security reduces risks such as product theft and product diversion, says Carlos Alvarez, Health Sciences Technical Manager for Dietary Supplements, NSF International

Increasing economic prosperity in developing regions such as Mexico, Poland, Russia, India and China has opened up new and enticing dietary ingredient sourcing opportunities for European- and American-based dietary supplement manufacturers. World demand for nutraceutical ingredients is projected to increase by more than 7% annually to $241 billion in 2019.1

Ingredient imports will continue to grow as a result of cost concerns (need for lower costs and higher productivity), availability (includes seasonality), consumer demand for diverse food products, the rise of emerging markets and the scarcity of natural resources. This continued growth is creating increased complexity for regulators as supply chains become more complex.

It can be challenging to trace products, ensure that all entities within the supply chain meet their responsibility for food safety and quality, and address the ever-growing number of supply chain threats. Nevertheless, quality still reigns as the most important factor when choosing an ingredient supplier. Buying ingredients solely on price considerations leaves companies exposed to potential corner cutting, poor quality or even adulterated ingredients.

According to a Quadrennial Homeland Security Review Report, 28% of the participants stated that supplier failure is the category that poses the most potential threat to their organisations.2 For companies to succeed in the extremely competitive dietary supplement market, they cannot ignore consumer concerns about quality and supplier performance. Regardless of where you source your ingredients, your company should look into properly approving its suppliers, qualifying the sourced materials and implementing programmes to protect the integrity and security of the supply chain.

Supplier qualification programme

Qualifying vendors is necessary to ensure the quality and identity of materials received. A well-functioning vendor qualification programme can significantly reduce the amount of testing needed on incoming materials, and it also reduces the risk of a final product becoming contaminated or adulterated. Yet, many companies struggle to develop a rigorous supplier qualification programme.

First, because there is still confusion on what constitutes a 'good' or 'rigorous' supplier qualification programme in a complex, globalised supply chain. Second, suppliers straddle the line between food and dietary supplements, having to comply with Good Manufacturing Practice (GMP) requirements of both industries (21 CFR Parts 110 and 111).

In addition, ingredient suppliers must also consider their compliance with food safety regulations, including new and emerging legislation such as the US Food Safety Modernization Act (FSMA). To add to this confusion, the FDA requires manufacturers, packagers, labellers and warehouse/distributors of nutritional supplements to qualify each of their suppliers, but do not provide guidance on how a company is to perform this qualification.

A robust supplier qualification programme consists of two phases: vendor approval and material qualification

It is important for the dietary supplements industry to know that, from the GMP (21 CFR Part 111) perspective, implementing a supplier qualification programme is crucial to ensure ingredient safety. Companies should implement robust supplier qualification programmes with the objective of being able to demonstrate to any auditor, and especially FDA inspectors, that the ingredients they source meet the supplier’s certificate of analysis and are free from unacceptable levels of contaminants (heavy metals, pesticides, dioxins, etc.).

A robust supplier qualification programme consists of two phases: vendor approval and material qualification. Correctly executing the vendor approval phase (also referred to as vendor qualification) will provide necessary evidence that the supplier complies with GMPs and is able to consistently produce quality ingredients to your specifications. A well-executed material qualification (also referred to as 'ingredient testing') provides proof that the quality and purity of the sourced ingredients have been verified.

A comprehensive vendor approval phase should start with a paper audit, a review of supplier technical data, preliminary certificate of analysis (COA) verification, GMP questionnaires, third-party certifications, etc. Accepting or requiring suppliers to earn GMP registration from an accredited third party has become a standard in the industry and is an acceptable alternative to conducting on-site supplier audits. GMP registration demonstrates that a supplier has been audited and found compliant with US FDA GMPs by an accredited third-party organisation such as NSF International.

In addition to paper audits, companies should plan to conduct on-site supplier audits using a risk-based approach. There is a growing trend in the industry wherein dietary supplement manufacturing companies subcontract a portion of their operations to third-party contractors. It is highly recommended that companies conduct on-site audits of these third-party contractors, either by company personnel or experienced, reputable and credible consultants/auditing firms.

The supplier qualification programme should also include an ongoing assessment of supplier performance, which can be done by a paper or on-site audit, based on a written risk management plan. Companies should also have criteria for both disqualifying and reapproving suppliers, along with quality agreements establishing responsibilities and procedures among supply chain partners.

The material qualification phase can be done by the in-house QC lab or an accredited third-party laboratory. This phase requires the verification of the supplier COA via analytical testing (and later, periodic reverification). Unfortunately, unacceptable practices still exist in the dietary supplement industry, which underline the importance of finding a credible third-party laboratory to conduct material testing.

The third-party lab you choose should be capable of testing complex formulas or matrices and detecting all types of contaminants at trace levels. It should have proper equipment and well-trained staff, and be accredited to test dietary supplements.

Foreign supplier verification programme (FSVP)

FSMA gives FDA unprecedented authority to better ensure that imported products meet US standards and are safe for US consumers. The FSVP includes

  • importer accountability to verify that their foreign suppliers have adequate preventive controls to ensure that the food they produce is safe
  • FDA accountability to create a voluntary qualified importer programme (expedited review and entry of foods from participating importers)
  • certification requirements for high-risk foods to be accompanied by a credible third-party certification or other assurance of compliance as a condition of entry into the US.3

The FSVP requires importers to conduct risk-based foreign supplier verification activities to verify that imported food is not adulterated, and to review the status of compliance (FDA warning letters, import alerts, etc.) of the food and the potential foreign supplier before importing the food. The good news is that implementing an FSVP strengthens any supplier qualification programme.

Good manufacturing practices

The years 2011–2014 proved to be very active ones for FDA, particularly with regard to GMP inspections and issuing 483s and warning letters. GMP violations continue to follow the same trend: lack of appropriate identity testing, lack of appropriate product specifications, lack of finished product testing and lack of appropriate supplier qualification programmes.

There are many reasons why firms are still struggling to meet 21 CFR Part 111 GMP requirements. They often do not have the sufficient quality personnel resources to implement the requirements, or are unprepared for the complexity of meeting GMPs, including documentation and testing requirements. Firms have often not budgeted for the new expenses of quality (including training) and testing. Ingredient suppliers that take GMPs seriously will be at an advantage compared with their competition and look much more attractive to dietary supplement companies looking for responsible supply chain partners.

Supply chain protection

The global supply chain is inherently complex, dynamic and fluid; it is subject to uncertainty, ambiguity, friction and an ever-growing number of threats. Laws and regulations have been implemented to protect the supply chain, including the Bioterrorism Act of 2002, FSMA and initiatives such as Protecting America’s Food Supply: Investments for Supply Chain Safety and Security, which allows for faster FDA responses, targeting areas of greater risk, more frequent and targeted inspections, and increase the communication of risks to the public.4

Another effective approach to regulating the supply chain is relying on risk-based prevention with a verification-focused approach to hold all segments of industry accountable for ensuring that their products meet US safety standards, with FDA verifying compliance with standards. This supply chain safety and security approach 'defines a set of policies, procedures and technologies used to provide visibility and traceability of products within the supply chain, for the purpose of minimising the end-user’s exposure to adulterated, counterfeit, falsified or misbranded products or materials.'5

It is achieved by implementing procedures to control both the forward supply chain (movement and holding of materials or products from the manufacturer to customers) and reverse supply chain (customers returning used products to the distributor or manufacturer for reuse or disposal). This approach helps to reduce risks that can arise anywhere along the supply chain.

A proper supply chain protection programme involves two components: integrity and security. Supply chain integrity provides quality and safe products to the end user, which is achieved by companies implementing a supply chain management system that is integrated with their quality management systems. For this programme to be effective, companies should implement programmes and/or systems such as supplier qualification, a foreign supplier verification programme, the testing and release or incoming raw material and finished product specifications, components/product rejection procedures, product returns, product complaints/serious adverse events, product recall management, traceability programmes and Good Distribution Practices.

Supply chain security reduces risks such as product theft and product diversion. It minimises the impact of any threats, makes security measures more effective (lowering vulnerabilities) and reduces the impact of adverse consequences on the business. Risks are evaluated based on threats, vulnerabilities and associated consequences based on the implementation of a security management system that is integrated with the company’s quality management systems.

References

1. BCC Research, Nutraceuticals: Global Markets: www.reportlinker.com/p02506884-summary/Nutraceuticals-Global-Markets.html (November 2014).

2. Quadrennial Homeland Security Review Report, 'A Strategic Framework for a Secure Homeland,' www.dhs.gov/xlibrary/assets/qhsr_report.pdf (February 2010).

3. US FDA, 'Frequently Asked Questions,' www.fda.gov/Food/GuidanceRegulation/FSMA/ucm247559.htm.

4. US FDA, 'Protecting America’s Food Supply: Investments for Supply Chain Safety and Security,' www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Reports/BudgetReports/UCM153494.pdf.

5. US Pharmacopeial Convention, '<1083.4> Supply Chain Integrity and Security,' www.usp.org/sites/default/files/usp_pdf/EN/USPNF/1083_4_scis_pf_40_4.pdf.

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