Best Practices in Vendor Risk and Compliance Management

Best practices in vendor risk and compliance management need to be inculcated by vendors who deal with them because of the enormous risk their activities carry. Implementation of best practices in vendor risk and compliance management goes a long way in checking risks and with it, the adverse fallouts of a vendor management program.
First of all, why do organizations have a vendor partnership? It is because this kind of arrangement helps them to take care of their logistics and other aspects of their business in a much more streamlined and economical fashion, and this in turn helps them to concentrate and focus on their core business better. A strategic vendor partnership helps organizations manage their products and services better, and more economically. The root to this is inculcation of best practices in vendor risk and compliance management.
The importance of best practices in vendor risk and compliance management can be understood from the fact that when companies outsource their operations, or particular parts of them, or some of their activities, this does not include organizational responsibility. So, the onus of ensuring compliance with regulatory guidelines and making sure that the vendor has implemented best practices in vendor risk and compliance management lies squarely with the organization that outsources.
Burden is on the organization that hires vendorsThis places a heavy responsibility on them, since of late regulatory guidelines for best practices in vendor risk and compliance management have become all the more stringent. While outsourcing part of their activity or operations or logistics or even parts of product development to vendors; companies have to be very sure that they are in tune with best practices in vendor risk and compliance management.
The basis to implementing best practices in vendor risk and compliance management is to get a clear comprehension of vendor responsibilities. Many organizations make the mistake of assuming that best practices in vendor risk and compliance management need to be implemented only at the stage of selecting the vendor. This is disastrous thinking, because selection of the vendor is just the beginning of the outsourcing program. These organizations have to make sure that best practices in vendor risk and compliance management is a continuous program and activity, and hence utmost care has to go into managing them at all times.
Reasons for increased need for implementation of best practices in vendor risk and compliance managementThe need for adaption and implementation of best practices in vendor risk and compliance management has become all the more acute and necessary in view of the following factors:

click to continue reading

Quality Risk Management in the FDA-Regulated Industry

Quality risk management in the FDA-regulated industry is a vital area of regulation for the FDA. Risks to quality may arise from many sources. The FDA has entrusted itself with the responsibility of making sure that the quality of the products it regulates is maintained through a due process.
Quality risk management in the FDA-regulated industry is an extremely broad area that straddles Quality in almost all areas that the FDA regulates. The FDA has regulations for particular areas of Quality, such as pharmaceuticals, medical devices, drugs, life sciences and so on. Quality risk management in the FDA-regulated industry is aimed at utilizing core principles in many areas of health and public safety.
Benefits should outweigh the risksThe rationale for Quality risk management in the FDA-regulated industry is that the benefits a product brings for its users, namely patients, should be greater than the risk it brings in its wake. Risk, as we all know, is something like a side effect or a shadow, which accompanies the product just whenever and wherever it is used, and the products itself is unthinkable without the risk. Risk managers and regulators alike acknowledge the fact that risk is not only avoidable; it is not something that can be eliminated fully.
So, how feasible is Quality risk management in the FDA-regulated industry when it is a given that risk is inherent in any product or activity? As mentioned above; the FDA (or for that matter, any other regulatory agency) proceeds on the belief that risks can only be mitigated. This certitude is the cornerstone of formulation of policy concerning Quality risk management in the FDA-regulated industry. So, the FDA formulates best practices and regulatory requirements for containing risk.
Quality risk management as laid out by the FDAThe FDA formulates risk management strategies and best practices that help manufacturers understand the ways of risk mitigation and hazard control, so that the maximum possible safeguards are put in place to ensure risk mitigation. The FDA goads manufacturers to imbibe risk management into their core, suggesting that they make it a part of their culture.
The proper use of the principles of Quality risk management in the FDA-regulated industry is aimed at fostering compliance with regulatory requirements. Quality risk management in the FDA-regulated industry is tied to a few important principles such as Good Manufacturing Practices and Good Laboratory Practices, among many others.

The Q9 Quality risk management guidelineThe primary guidance set out by the FDA for compliance that ensures Quality risk management in the FDA-regulated industry is the Q9 quality risk management guideline. Among the fundamentals required in the quality risk management process of this guideline are:

• Assumption of responsibilities for implementing and ensuring Quality risk management in the FDA-regulated industry by people in an organization who are entrusted with the task of decision making regarding quality
• Initiation of a process for quality risk management

Risk assessment is a major exercise at which the following need to be taken into consideration:
Quality risk managementRisk assessment is also built on a triad of principles as part of Quality risk management in the FDA-regulated industry:
Further, the next steps in Quality risk management in the FDA-regulated industry are:

• Risk control, consisting of issues such as:
  • Ways by which to reduce it
  • Striking a balance between risks, benefits and resources
  • Identification of possible new risks in the process
• Reduction of risk
• Acceptance of risk
• Communicating of the risk in the proper manner and to the right person(s)
• Review of the risk.

click to continue reading

What is logistics and supply chain management?

Logistics and supply chain management (SCM) constitute a very important element of businesses. Getting the logistics and supply chain management aspects right is necessary for the smooth flow of products from their source to destination, during the course of which many activities need to be performed.
Logistics and supply chain management is emerging as a major area of business because of the evolution and growth of globalization. Many products and goods are produced in one country and consumed in another situated thousands of miles away. The right logistics and supply chain management helps to deliver the goods and products to the right person, at the right time, at the right place and in the right condition. Lack of proper logistics and supply chain management is a recipe for disaster.

What is logistics and supply chain management?Among the lay people, there is a tendency to use the two words synonymously and interchangeably. In trade, however, there are major differences between the two. Logistics is just a part of the supply chain. In simple, general and broad terms, one can understand the difference between logistics and supply chain in the following ways:
Logistics is a part of supply chain, meaning that it is a set of activities that are carried out within an organization. Supply chain, on the other hand, is the full set of activities that are carried out from start to finish, i.e., from the time it departs the organization that it is leaving till the time it reaches its logical destination. In this process, supply chain management involves the coordination and collaboration of many entities. In this sense, supply chain is a whole set of activities, of which logistics is only a part.
Another way of understanding logistics and supply chain management 
Another way of understanding logistics and supply chain management is this:
Logistics can be understood as being a discipline in which the following activities are involved:

On the other hand, supply chain management can be said to include more extended activities, which include:
Logistics and its extended activitiesLogistics often is described in terms of inbound and outbound logistics. Simply put, inbound logistics is the movement of raw materials and goods that are bought by and transported into a company. When these are processed and finished and shipped to customers; they become part of outbound logistics.
Logistics and supply chain management in a broader contextWhen one tries to get an understanding of logistics and supply chain management at a higher or broader level in the way logistics has been described above; supply chain management can be understood as consisting of these elements:
A sound supply chain system seeks to create value for the organization by building and utilizing logistics infrastructure. Logistics and supply chain management become meaningful when the organization synergizes demand with supply, stock and supply and inventory management

click to continue reading

What are the potential areas of risk management?

The most critical aspect of risk management is the identification of potential areas of risk management. This helps the organization to stay focused on the areas in which it could possibly face risks, rather than taking an aimless view and shooting about in the dark.
In a very broad sense, the potential areas of risk management include all areas of a business, because simply no area of the business is exempt from a risk. Talk about finance, and it comes with a risk. What about manufacturing? And what about operations or marketing? How about human resources? In this very expansive sense, every area or activity of the business is among the potential areas of risk management.
Potential areas of risk management could lie simply anywhere
On top of these potential areas of risk management that each part of the business is prone to; there are also the other industry-related risks that inhere into any business. The risks of running, say, a firecracker business, are much higher than running a grocery store. So, potential areas of risk management should ideally include a very broad discussion on every aspect of risk management.
However, when one takes an overview of the potential areas of risk management instead of trying to break down the elements of each function in which there are potential areas of risk management; one can classify these among them:
Generic risks: As we have been discussing, any business, absolutely any business, comes with some degree of risk. And, each business comes with its own generic risk, such as falling short of funding at crunch times, core people leaving the organization at important times, logistics failures at critical times, and so on.
Product specific risks: As the title suggests, this kind of risk is specific to the product that the business deals with. Some products come with their unique risks, and hence, this kind of risk counts among the potential areas of risk management.
People-specific risks: These can happen in a business in which much depends on a few important people. The inefficiency or departure of such people could be among the potential areas of risk management for businesses or projects that are dependent on people.
Financial risks: Obviously among the top potential areas of risk management; financial risks come into play when the organization is not able to meet its bottom lines due to a variety of factors. Not getting funds on time, not getting payments from customers on time, not being able to service debts are some of the factors of financial risks.
Technology risks: Technology is a high area of risk, because it keeps changing at a breakneck speed. If organizations don’t keep up with the pace, technology risks could count among potential areas of risk management.

Market risks: Market risks are yet another of the potential areas of risk management because most businesses are run on the assumption or speculation that a market is going to grow at a certain rate or pace. If the estimate of this market goes wrong, it affects the business negatively. Customer risks: The ultimate decider of the business is the customer. If a customer gets irate at a bad product or service and issues bad press, it could become one of the biggest of the potential areas of risk management.
Real estate risks: For some businesses, especially retail, the location of the business is a major factor. In many instances, the choice of location could often decide the fate of the business. Imagine setting up a high end retail store in the vicinity of a slum. Does that make sense? Yet, even if a business chooses the right location, it could sometimes be forced to relocate due to factors such as legal issues of the property, making this among the potential areas of risk management.
Finally, what needs to be said is that the list above is by no means a comprehensive one. The potential areas of risk management, as we have discussed at the beginning, are simply too many and too fluid and subjective. They could vary from market to market, product to product and business to business. A business that is perceptive about the market has to make the right assessment of the potential areas of risk management before it starts one. It should also be ready to face the potential areas of risk management if it is up against any factor that lies beyond its reach or forecast.

click to continue reading