The introduction of the FSMA requirements for suppliers, both domestic and foreign, has introduced a very prescriptive set of control measures, actions and requirements for companies. This includes specific requirements for material types, such as produce and LACF, etc.
This is leading to a situation where some companies are being forced to set their Supplier Quality Management (SQM) requirements against specific requirements of US legislation for all activities, regardless of whether they fall under FSMA.
This could cause companies to question if their business needs are being fully served by this approach. Is it smart to align internal management processes with the legal requirements of one jurisdiction, or is that a reactionary approach that requires further consideration?
This question becomes particularly important given that the actual enforcement of the requirements of FSMA remains an open question on many fronts, not just for the food businesses concerned but also for the FDA, the agency responsible for its enforcement.
With this question unanswered, this blog discusses the factors that can affect choosing the optimal Supplier Quality Management System for your business. As this is an ongoing development, the below considerations are likely to change and evolve with time. I therefore suggest that anyone reading this blog view it as a musing on how things may develop as they currently stand, and to always thoroughly check that the below is applicable to their own situation before implementing.
The current US political situation
Recent political changes have further complicated the uncertainty that surrounds FSMA.
The newly incumbent President Trump had previously suggested that support for the FDA, in its role as the ‘Food Police’, would be pulled back. Although the Trump campaign quickly retreated on this point, it has caused uncertainty concerning the actual implementation of FSMA requirements.
Another perspective could be that a more protectionist policy by the US government could see the very detailed and bureaucratic aspects of FSMA being used as a tool to restrict the commercial activities of businesses seeking to import goods into the US market.
The bureaucratic aspects of FSMA could be used as a tool to restrict the commercial activities of businesses seeking to import goods into the US market
As of the time of writing, the FDA have not started inspections or enforcement activities for the new requirements. However, they have stated that they will focus on the largest businesses first.
The FDA have not started inspections or enforcement for the new requirements; however, they will focus on the largest businesses first
This suggests that whatever the effect of FSMA is, it will be seen first amongst the large food businesses, and the FDA may well seek to make examples of these in the process.
Currently, the key issue for every business in the market is uncertainty.
When it comes to any risk assessment, by definition, uncertainty or gaps in data or knowledge increase the level of uncertainty, and therefore increase the likely risks of doing business. Unfortunately, the assessment of the risk of FSMA must now include, not just the technical requirements of the legislation, but also the political situation that surrounds it.
The assessment of the risk of FSMA must now include, not just the technical requirements, but also the political situation that surrounds it
If the new administration in Washington adopts a more protectionist policy, then any interpretation of the FSMA requirements, which seeks to be practical, may lead to a detail which the FDA deem to be a non-conformance, e.g., not collecting the accreditation certificate of a laboratory conducting tests on products entering the market. A company may, reasonably, conclude that ensuring this is performed is overly bureaucratic and impractical. However, a border inspection at the point of entry which results in a request for this documentation to be supplied within 24 hours creates a commercial risk for the company.
Another example is the requirement to conduct audits on suppliers annually, which is a major requirement for products exported to the US. A company will need to question whether or not they will 1) perform these audits, 2) contract out to a certification body, or 3) use an already existing certificate provided by the supplier.
In practice, and for practical implementation, everyone would recognize that option 3 is the solution. However, it remains an open question and the FDA may decide that foreign suppliers must conduct the audits themselves.
A FSMA compliant Supplier Quality Management System?
This is a question that becomes more problematic the larger the size of the business in question. It is clear that aligning a global SQM system to the legal requirements in one geographical region may not be the best approach, especially when the enforcement realities are not clear.
Aligning a global SQM system to the legal requirements in one geographical region may not be the best approach when the enforcement realities are not clear
On the other hand, a global SQM system which does not address the requirements of FSMA in full (no matter how reasonable any dilution of the requirements may be) may lead to a significant commercial risk, such as products or materials being impounded at the point of entry.
When choosing which approach is best to follow, there are 4 perspectives that one can take as to how FSMA may unfold:
1) The FDA are incapable of enforcing the law due to a lack of political support and federal funding
2) The FDA and the objective situation continues to be open and unclear, and trade continues as is for a protracted period of time
3) The FDA adopt a reasonable and practical approach to the requirements of FSMA
4) The FDA adopt a ‘by the letter’ approach and use any details as a basis to restrict trade and drive a protectionist policy
The risk of adopting any of the above perspectives needs to be determined in terms of the worst-case scenario balance with internal resources and effective business processes. It is vital, regardless of which perspective is chosen, that your business:
• Maintains a constant vigil of emerging events in the US, particularly when inspections and enforcements commence. This will be the most valuable intelligence to drive decision making in a dynamic regulatory commercial, or political environment.
• Monitors all guidance coming from the FDA on the legal requirements.
Analysis: Choosing the right Supplier Quality Management System
The Supplier Quality Management System chosen will depend on the perspective your business takes towards FSMA.
Regardless of which perspective is adopted, there are three potential options available:
|DUAL SQM SYSTEM||SINGLE SQM SYSTEM (FSMA-BASED)||SINGLE SQM SYSTEM (INTERNALLY-BASED)|
|This would see two separate systems of SQM based on whether the material falls under the requirements of FSMA.||Based on FSMA requirements. Incorporates all the requirements of FSMA, regardless of whether they are applicable to the material or supplier.||Incorporates what your business interprets as the sufficient, but minimum, requirements to meeting own supplier requirements and FSMA requirements.|
|Based on an early question asked in the supplier assessment process, the material would be determined as either FSMA or non-FSMA.||All materials regardless of their use, market, etc. would be assessed on the basis of FSMA requirements.||Would be a less burdensome system covering existing supplier control requirements with some add-ons to address FSMA where deemed relevant.|
|Following this, the material would enter either a FSMA or non-FSMA workflow for Risk Assessment and Approval.||This would be a full compliance process covering all document requirements.||Does not contain any FSMA related language.|
|The FSMA workflow would include all requirements of FSMA, while non-FSMA would be your basic requirements for suppliers.||The option of removing FSMA related language can be considered here.||A wait and see policy will underpin this and the requirements are adjusted as more intelligence comes to light.|
Option 1 – Dual SQM System
The organization should determine at the beginning of the Supplier and Material Assessment process whether they fall under the requirements of FSMA, i.e., is the material to be exported or marketed in the US?
If the Supplier and/or Material fall under the FSMA requirements, they will undergo the assessment process covering the requirements of FSMA, e.g., DocLists requiring all the documentation to comply with FSMA.
If the supplier and material do not fall under FSMA, then the appropriate internal assessment program will be selected, which it is assumed will not require as much documents to be collected.
Advantages: Unnecessary document collection can be avoided for non-FSMA suppliers and materials.
Disadvantages: A greater number of programs will need to be maintained. This will also include the arising control measures, which will also need to be defined.
Option 2 – Single SQM System (FSMA-BASED)
Internal systems would be based fully on the requirements of FSMA. Regardless of the supplier or material, and its relevance to FSMA requirements, they will be assessed based on FSMA and approved. If chosen, FSMA related language can be removed in order to make it more palatable to your staff and suppliers.
Advantages: Only one set of programs for each supplier and material type needs to be maintained, including control measures. There is also the added security of knowing FSMA requirements are in place without having to determine if they are required or not.
Disadvantages: Increased overhead for managing non-FSMA suppliers and materials.
Option 3 – Single SQM System (INTERNALLY-BASED)
Existing assessment systems are maintained with some additional bolt on requirements in the event that FSMA requirements are relevant.
The requirements would be based on a minimal interpretation of the FSMA requirements and seek to keep the burden to a minimum. This assumes that the current existing system is sufficient to meet the requirements of FSMA as they will be enforced in the coming period.
This approach requires detailed and proactive monitoring on the objective situation at the ground level. It must also be dynamic enough to ensure changes can be made quickly to the requirements should more information and data be required from suppliers.
Advantages: Maintains the existing system with minimum changes.
Disadvantages: Risk of not meeting some requirements and having to react to them. When more information emerges on how enforcement will be conducted, this may lead to having to return to a significant number of suppliers to request more information and data.
The future of Supplier Control
FSMA shifts Supplier Control from the realms of reasonable and trust-based Supplier Management to one of objective documented evidence for all aspects of the material and supplier controls.
There is also the unknown risk of the emerging political situation which places Supplier Quality Management beyond pure risk management of suppliers and more into the realms of reducing the likelihood of boarder rejections due to absence of paperwork.
FSMA shifts Supplier Control from the realms of reasonable and trust-based Supplier Management to one of objective documented evidence for all aspects of the material and supplier controls
In these circumstances, your business has to take the lead and make a determination regarding which approach will be adopted.
Very often, in a situation where there are so many unknowns the best approach may be adopting the precautionary principle.
By its very nature, FSMA will lead to an increase in the burden of supplier management regardless of how the situation develops. While all businesses should seek to maintain efficient internal systems where possible, this needs to take account of the fact that FSMA is a massively bureaucratic requirement which will lead to more work.
Businesses should strive to recognize this and adopt the most effective approach managing this additional overhead.
Disclaimer: This blog is not legal advice and should be considered educational in nature. You may implement this advice at your own risk.