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November 3, 2003

5 Min Read
Words of Wisdom: The paperless insurance policy


Serge Jonnaert is executive vice president of marketing at American MSI Corp., a supplier of data-management and hot-runner-control equipment.

Secure batch control systems can mitigate liability risk and become a plastics processor?s best marketing tool.

By now most of you have embraced quality management practices. As a result, you have improved operational performance and ultimately the quality of your products. No matter how many quality practices have been adopted, however, the customer will always demand proof of that quality, and rightfully so.

?Prove it? can be a loaded imperative?gentle and preemptive when screening new products and suppliers, or threatening when it comes in the course of a product liability inquiry. Too many companies, especially contract manufacturers, overlook the risk attached to product liability. The fine type in purchasing agreements can easily trigger multimillion-dollar liability claims when things go wrong.

While most companies are putting more emphasis on quality, every year thousands of products are recalled, either voluntarily, or by order of consumer protection agencies. The most visible example of product liability, although quickly fading in our collective and individual memories, has been the Firestone/Ford tire recall. An unprecedented 27 million Firestone ATX, ATX II, and Wilderness AT tires were recalled at a cost of approximately $3 billion. Bridgestone stock shares fell more than 37% as the story unfolded. There were some 1400 complaints involving 250 injuries and 88 deaths in the U.S. alone, bringing the litigation and settlement cost to $690 million.

Recalls are not limited to the automotive world. In July 2001, Sony Corp. recalled a series of cellular telephone handsets at a cost of $95.5 million. Aside from the astronomical cost to replace products, manufacturers usually face a public relations nightmare, leading to reduced sales as the consumer?s trust in the company?s brand dwindles. Also, there is a very real possibility of lengthy and costly litigation if the product?s failure causes personal injury, death, or economic loss. Add to that an increasing number of products that are regulated, monitored, and recalled, by order of consumer protection agencies such as the Food and Drug Administration (FDA), the National Highway Traffic Safety Administration (NHTSA), or the Consumer Product Safety Commission (CPSC).

Going the Paperless Route

One of the most widely discussed (and still contentious) initiatives has been the FDA?s 21 CFR Part 11, a regulation that accommodates paperless record systems, and provides criteria under which the agency will accept electronic records as the equivalent to paper records, and electronic signatures as the equivalent to traditional handwritten signatures under the Current Good Manufacturing Practices (CGMP).

Using a paperless secure batch control system can substantially mitigate liability risk. It provides instant access to detailed production data, enabling a company to respond faster and in a more comprehensive manner to product quality and safety issues. With that comes a considerable reduction in financial exposure, as recalls can be limited to certain production batches, based on specific failure criteria.

Most plastics processors still maintain basic paper records of equipment, recipe, process, and production data. This practice is tedious, time-consuming, and makes it virtually impossible to adequately meet rigorous documentation and tracking requirements, especially when it comes to regulatory compliance.

A paperless secure batch control system automatically captures accurate process data, including who does what, where, and why, as it relates to the production of a batch. This allows a processor to definitively document that its products were manufactured within a narrow process window, effectively guaranteeing the quality of its products.

Adequate security plays a very important role. It comes down to proving that the data was tamper-free from the point where the information is captured from the process equipment to the point where it is presented in a written or electronic report.

Aside from a paperless insurance policy, secure batch control systems may soon become a contract manufacturer?s biggest marketing tool. This brings us back to the question of how best to meet customers? demands for proof of quality in your manufacturing process. Take this example: Two suppliers vie for your business. All other factors being equal, Contract Supplier A comes and pitches its management philosophy and quality assurance practices, while Contract Supplier B also guarantees certified, tamper-free process documentation for all parts manufactured. Which supplier would you choose?

Going paperless has numerous other inherent benefits. First and foremost is elimination of the long-term cost of paper-based systems. The cost of paper systems increases exponentially as production archives grow in size. The inefficiencies associated with cataloguing, sorting, and searching paper archives can no longer be justified by today?s standards. A paperless system also provides increased visibility, to all production areas, in real time.

Implementing the ?secure? in a paperless batch control system requires an investment, both financially and in terms of resource utilization. First, it implies the use of a closed system where access to all equipment control panels and workstations, without exception, is restricted to authorized individuals using a two-token identification and password code combination.

It also requires centralized user rights management, secure networking communications using an SSL (Secure Socket Layer), advanced database engines that support triggers and record validation using hash algorithms, and document data encryption. While the above terminology may get you a nod of praise from your company?s CTO or IT managers, in layman?s terms it basically provides the technology framework that allows you to know who did what, where, when, and why. An operator can not plausibly disclaim the record of his or her actions.Installing a secure batch control system also requires instituting new operating procedures that could be perceived by personnel as an oppressive ?big brother? who is watching. To address this, staff should be educated on the merits of uncompromised quality and the sacrifices needed to achieve it.

Implementing a secure batch control system may appear to some as unnecessary and burdensome. However, one should not forget that the larger objective is to provide documented proof that a company meets the absolute highest standard of quality. Companies that embark on this mission will benefit from an unquestionable image of quality in the market, a powerful statement in today?s global market.

Contact information
American MSI Corp.
Moorpark, CA
Serge Jonnaert
(805) 523-9593
[email protected]

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