Costs of Failure in Product Quality - Pharmaceutical Technology

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Costs of Failure in Product Quality
The authors detail the possible consequences of noncompliance and a lack of quality control.


Pharmaceutical Technology
Volume 36, Issue 4, pp. 110-118

Moral and morale issues

Moral issues are determinations of what is ethically right or wrong. Even if a product meets specifications, there may be lingering doubt regarding the product, and the "right thing" may be not to release the product or to have a market withdrawal. Morale issues, on the other hand, are internal issues that keep the employees dedicated and happy with their employer.

Morale and moral problems are not easily measured in financial terms. The short-term and long-terms effects could be devastating for a company's competitive superiority, new product development, and associated product quality. Recurring recalls, a regulatory notice about a company's product quality, adverse publicity, and imminent punitive actions can have a negative impact on the morale of company personnel. These actions adversely affect all personnel across the organization including R&D, operations, sales and marketing, and other departments.

Insufficient attention to quality may lead to distrust between workers and their management. Failures to meet acceptable quality guidelines (i.e., cGMP) and failure to develop and follow proper guidelines and standards may be perceived by some employees as a direct consequence of lack of proper support by management. This may result in the loss of key employees and lower productivity by employees who choose to stay and remedy the deficiencies. Loss of knowledgeable and experienced people also results in loss of know-how and technology to competitors eager to attract experienced and talented workers. The damages resulting from such loss may be significant but hard to quantitate. Overall, the productivity of the company may drop significantly not only due to lost employees but also due to negative impact on employee behavior. This need may result in overburdened employees taking on additional workload to support ongoing and future business needs. These potential problems can be avoided, or at least minimized, by strong governance by top management, and a relentless focus on quality as an overarching business objective to ensure satisfied customers, government regulators, and satisfied employees.

Reputation and credibility


Examples of challenges faced by a company after receiving an FDA Warning Letter or a similar regulatory noncompliance notification
Negative regulatory actions (i.e., audits by regulatory authorities pointing to noncompliance observations, excess recalls, warning letters, and product seizures) cause extreme stress on the company, its management, and its employees. Customers question the quality of production of not only a product that failed specifications or had to be recalled, but also the company's operations in general. FDA may decide to not approve or accept any new filings, and the various government organizations (e.g., Veterans Administration) may not accept any product from a company that is under a warning letter or other punitive actions from FDA. Management concerns include loss of confidence in certain areas, moral issues concerning product safety, and their own image in the regulatory, professional, and business worlds. Management must develop strategies to address the situation on hand, to motivate employees, to communicate with suppliers and vendors, and to deal with national and international regulatory agencies where company products are sold. They also have to deal with ever-present challenges to keep employees motivated, productive, and dedicated to resolving regulatory problems. In addition, they must develop plans to alleviate employee issues and stop the loss of talent and technology to competition. The situation may deteriorate to an extent that a good number of experienced employees leave the company and key supervisors must be replaced. This may have a significant negative operational effect with an immeasurable cost to the company. Replacing an experienced employee is not only financially costly but may lead to lower employee morale. If not well trained and sufficiently experienced, a new employee may have a relatively small chance of success under difficult circumstances and may introduce his own issues in dealing with other employees and management with preconceived expectations.


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