Need your advice to survive!

[SeanN]

I am reaching out with a matter that has raised questions within our group of companies, and I would greatly appreciate your insights.
Within our group, which comprises various types of companies, including labs, manufacturing sites, and distribution centers, each member holds their own quality certifications such as ISO 9001, ISO 17025, and ISO 17034. Importantly, these entities often act as both suppliers and customers to one another.
Here is the specific scenario that has led to our inquiry: When a member manufacturer, responsible for producing reagents and kits for the group, enters into a contract with our group's parent company and delegates distribution activities to another member, such as a distribution center, can the manufacturer relinquish its distribution responsibilities and accountabilities concerning the ISO 9001:2015 certification and audit scope?

From my perspective, it seems that the manufacturer remains accountable for the quality of their products. Clause 8.4.1 of ISO 9001:2015, which pertains to the organization's criteria for monitoring performance and re-evaluation of external providers based on their ability to meet requirements, appears to be relevant in this context. It suggests that the manufacturer should have some level of control over the distribution services provided by the distribution center, including factors such as storage conditions and transportation.
I'd like to invite your opinions on this matter. If you agree or disagree with my assessment, please provide your reasoning. My immediate supervisor has a different perspective, stating that there's "no need to delve into its distribution activities. The manufacturer has only one customer - the distribution center"

Additionally, I'd like to explore whether anyone in our group perceives any potential conflicts of interest within this structure, given the complex relationships and interdependencies between our member companies.
Thank you in advance for your valuable input.

 

[Joseph B.]

If I understand correctly; B is mfg for A and C is distributing for B to A.

Regardless, the MFG (B) is still responsible for the outsourcing of disty to C. As you noted.

 

[Jen Kirley]

Looks clearly enough like outsourced process to me. Outsourcing a process does not mean outsourcing accountability. The contract is still held by the manufacturer, which means the manufacturer has the responsibility to see it through as overseer while the other party has the responsibility to carry out their deliverables.

 

[Paul Simpson]

It is impossible to be definitive without knowing the contractual relationship here but I'll have a go.

The way I read it, @SeanN your manufacturer still has some responsibility for the distribution activity in that its customer expects the product they buy to be delivered to them. The contract will be key, though, as it will identify who is responsible for what.

In the event of a failure to satisfy the user, the manufacturer will be required to get involved, I guess.

In any event, under the quality management system (and in accordance with ISO 9001) the various group companies are all interested parties (Clause 4.2) and their needs and expectations have to be considered.

Clause 8.4 will come into play only if the manufacturer is bringing in the distribution company. If it is the group that mandates the use of the distribution company then it is their responsibility to manage that particular relationship.

You are right that complex company structures bring complexity to the company's operations and processes. All we have to do is understand them and ensure that our processes work as well as they can.

 

[SeanN]

Looks clearly enough like outsourced process to me. Outsourcing a process does not mean outsourcing accountability. The contract is still held by the manufacturer, which means the manufacturer has the responsibility to see it through as overseer while the other party has the responsibility to carry out their deliverables.

Thank you, Jen. I am with the same idea, that the manufacturer retains accountability for the (quality of) distribution although they use a contract to handover the responsibility to the group (less works in maintaining their ISO cert?).
How to you see the distribution center (a function of the group, not a separate legal entity)? a service (outsourcing) provider? a subcontractor? or ... actually the mother company? What ISO clause(s) will help me to explain to my supervisor who keeps saying that the company have successfully explained to all 2nd and 3rd party auditors so far. Am I a troublemaker in their eye?

 

[SeanN]

It is impossible to be definitive without knowing the contractual relationship here but I'll have a go.

The way I read it, @SeanN your manufacturer still has some responsibility for the distribution activity in that its customer expects the product they buy to be delivered to them. The contract will be key, though, as it will identify who is responsible for what.

In the event of a failure to satisfy the user, the manufacturer will be required to get involved, I guess.

In any event, under the quality management system (and in accordance with ISO 9001) the various group companies are all interested parties (Clause 4.2) and their needs and expectations have to be considered.

Clause 8.4 will come into play only if the manufacturer is bringing in the distribution company. If it is the group that mandates the use of the distribution company then it is their responsibility to manage that particular relationship.

You are right that complex company structures bring complexity to the company's operations and processes. All we have to do is understand them and ensure that our processes work as well as they can.

Thanks Paul, the contract is a one-sentence contract, literally signed between family members. The contractual relationship here is really difficult to understand, but as an American group, I assume that it's nicely, legally set up.
The manufacturer signs the contract to keep their hands off the responsibility. We "feel" that they still have some responsibility for the distribution activity but it's not easy to tell (any clauses in ISO?). I can share with you that the contract simply says the mother/umbrella company is responsible for the distribution. The umbrella company doesn't need any ISO to make profits, but its members, right?
In the event of a failure to satisfy the user, the manufacturer will be required to get involved. But if it sees the root cause comes from the distribution channel, then they simply forward the problem to ... their mother, done! any possibility of abuse?
Your clause 4.2 is a valuable point for my situation. But it's too general and can be interpreted in different ways. To be ISO9001 compliant and to be ISO9001 certified are not the same.
I know many among us are very senior and highly respected auditors. What would you do if you "feel" a manufacturer is not compliant, but you "have to" give them the certificate" because you can't find specific clauses to argue with the auditee?

 

[Ed Panek]

The buck stops with whatever authority reviews the batch record and releases the product from production to any customer.

 

[SeanN]

The buck stops with whatever authority reviews the batch record and releases the product from production to any customer.

Thanks Ed, could you elaborate a little bit more? I am not sure if I fully get what you mean.

 

[Ed Panek]

For example, if we contract a third party to manufacture our device, we still review the production records and are still responsible for the product performance. We still control who where and how we sell either directly or via distributors and even which markets we sell into. We accept all complaints and feedback and corrective actions. We can outsource/delegate it but we are responsible for it.

 

[SeanN]

I am also longing for advice from Sidney, Jim, Randy, Mike, Big Jim, Qusys, Cari and many other senior professionals in our forum. Your comments will help shape and guide my QA mindset (and one difficult decision to make: stay or flee).
Much appreciated!