Better Batch (00:05.378)
Welcome to the Better Batch podcast where batch process manufacturers learn from industry experts. I’m Peter Suddard And I’m Alex Koves. We’re joined today by Nate Call CEO of Qualitas. Nate and Qualitas work with both brands and manufacturers from a quality perspective. We’re so glad to have you with us, Nate.

Nate Call (00:25.546)
Yeah, thanks for having me. Appreciate it.

Better Batch (00:28.654)
Nate, tell us a little bit about why companies bring you in.

Nate Call (00:33.418)
Yeah, good question. We work with brands and manufacturers in dietary supplements, food, beverage, beauty. We always make a joke that we’re the lotions and potions quality company. And we are typically brought in for kind of two general reasons. One is a gap assessment or kind of a pulse check of the quality system, whether that’s on the brand side or the manufacturer side, wildly different approaches in terms of how we assess

those businesses or we were brought in for less exciting reasons or more exciting depending on your perspective where there was an issue and the brand or manufacturer can’t find their way to the solution and we’re brought in to help with an investigation maybe we go on site do something like that but really anything under the sun quality and compliance related we build the business to do.

Better Batch (01:27.406)
Okay. And I’m kind of curious, it seems like a really different perspective where the brand is kind of asking you to go and take a look at the manufacturer versus where the manufacturer’s kind of volunteering for this and wanting to improve their quality systems themselves. Do you see a different kind of manufacturing facility in those two situations or are most of these manufacturers kind of getting both services, both the brand and self-care?

Nate Call (01:56.304)
It depends. We are engaged by typically by a brand to do things like supplier qualification, auditing where they have an existing legacy network of suppliers. We go in, do a one to three day, you know, basically GMP assessment audit of the facility, identify red flags, strengths, weaknesses, things like that.

And in that scenario, we see facilities of all shapes, sizes, levels of maturity. And when we’re engaged by manufacturers.

We see a lot of smaller kind of startup manufacturing companies who understand that there’s a lot they don’t know and in order for them to get to the next level, they have to establish very strong quality management systems. Otherwise, they won’t be able to lock in new clients and grow their business.

Better Batch (02:53.132)
Yeah, it’s interesting. think that other case where they’re doing it for a specific target, we often see a client come in and they’ll bring us in, as I’m sure they probably do you as well, where they say, okay, we’re working on a deal with Costco and they want to do an audit and now we need to get things ready. It’s like, guys, you need to go back in time a few months, please, because that’s going to be a big rush. Do you see that a lot where people have not left enough time to get it done?

Nate Call (03:22.014)
All the time we break hearts every day in conversations like that, right? Where.

Better Batch (03:25.762)
Nate Call (03:27.86)
You know, it’s, it’s Costco or it’s NSF or it’s, you know, one of those larger companies who wants to come in and assess the facility. get a lot of meeting requests from people who are 60 days out from those audits and say, okay, what can we do to sprint through creating a quality system that will satisfy this requirement from NSF, especially, think NSF is a good example. And, you know, in those types of audits, they want to see.

Better Batch (03:41.518)
Mm-hmm.

Nate Call (03:57.746)
three to six months of historical data. So just by that requirement alone, you’re already too late to the game. Where you call us 60 days out, it’ll take probably a week or so to figure out travel when we can go on site, plus a few days of report time. Call it, you know, two weeks as fast as we can possibly go, and now you are six weeks away from this audit, right? And it is a time and game.

Better Batch (04:07.886)
Mm-hmm.

Better Batch (04:22.478)
So help me figure out then how far ahead we should be booking something like this. So they want to see three to six months of historical data. So that’s maybe four. And we’ll talk to the auditor. Two weeks even just to organize and get you started. The part which feels like the actual work of developing, sprinting through, and developing a quality program.

How long does it take to develop that, do the work for a quality?

Nate Call (04:57.714)
It’s a good question and really depends on the complexity of the manufacturing processes that we’re looking at. We’ve built systems, you know, fast as 60 days, two months. We have also taken 18 months to build systems because if you’re an active manufacturer, which all of our clients are, we have very few that are pre-revenue in the startup phase.

You know, it’s like trying to repair a moving train while it is moving. And it is so difficult to…

Especially for the smaller manufacturers just to have the resources in place to support the project to where we can do it quickly where I can drop in, you know, like the special forces team of qualitas people. can send five people to the site. We can fly through it. But if you don’t have the resources and bandwidth on your side, the manufacturer side, what we’re doing is in vain and it really has to be steered by how fast the manufacturer can really move versus how fast

our team can move because we are almost always faster than the client can be.

Better Batch (06:05.176)
Right. It sounds like then for a well-motivated manufacturer, nine months, if we were to start today, pick up the phone and phone you today, nine months feels like a realistic time frame to get everything organized, get the work done, and start building up that backlog of data to impress the auditor. Cool.

Nate Call (06:25.886)
Right, totally. I think another important distinction there is, you know, we can build a system with someone in two months, like I said, but it takes another two months of fine tuning and adjusting and making sure everything is working how it’s supposed to. So I think nine months is a healthy amount of time to give the site reasonable opportunity to succeed.

Better Batch (06:48.782)
Sounds good. I mean, if it’s good enough for a baby, it’s gotta be good enough for a quality program, yeah. And then the other end of the spectrum, imagine a facility where they’ve put a lot of energy into building their own quality systems and they feel pretty good about their in-house work, but they’re scaling and taking on new business and they want like an outside perspective to come in and fine tune that. Like what would be an amount of time needed more in that context where they’ve got good confidence, but they also know they want an outside professional.

Nate Call (06:52.008)
Yeah, exactly, exactly.

Nate Call (07:18.56)
That’s a good question and we have kind of a few different paths we can take.

The first path is, you know, you pick up the phone, call us. I have someone on a plane in 48 hours. We go to the site. We’re there for three days, get you a report two or three business days later. And that report includes the executed GMP checklist or whatever standard we’re using. could be ISO. It could be SQF, some GFSI scheme. And we give you a 90-day action plan. And if you execute the action plan in those 90 days, from our perspective, you should be able to achieve whatever goals you have. And we try to tailor the action

Better Batch (07:31.694)
Mm-hmm.

Nate Call (07:54.802)
plan against the business objectives, not always what we would consider to be the most absolute important thing they need to focus on. If they have a very specific target, we’ll build our plan to align with that target and of course call out anything that is a safety issue.

We are very comfortable moving quickly, aligning with the business and making sure they have what they need to succeed. The other option is, you know, we take a little bit longer. We send out a data request list. We go through this process where by the time we walk into the facility, I’ve looked at the facility map. I’ve looked at your org chart. We’ve read all of your SOPs. We’ve already looked at the documentation. So we really hit the ground running and can move even faster in that scenario.

And typically with brands who choose that path, we are often engaged to execute the 90 day action plan with their team. And that becomes a very interesting scenario for all of us where it’s less of a, know, here’s a plan for you to follow. It’s we are tactically executing with you and we are going to hold you accountable every step of the way.

Better Batch (08:51.886)
Cool.

Better Batch (09:06.912)
and you’re just embedded with them for that whole process at that point.

Nate Call (09:10.58)
Yeah, we are temporarily inside their org chart as their head of quality.

Better Batch (09:14.371)
And that must move things a ton faster, having you guys there the whole time.

Nate Call (09:18.928)
Absolutely, absolutely. And we don’t have to be on site a lot to do this. Let’s do the three days. Maybe every month we’ll pop in for another two or three days or even less time than that. As long as we get the information we need, we don’t need to live on site with you. We have enough reps to where we get it.

Better Batch (09:36.13)
Very cool.

Better Batch (09:40.846)
You’d mentioned before one of the reasons people are calling you in is they’ve had failed batches. You’ve probably seen this a ton. What are the real common reasons for batches to fail?

Nate Call (09:56.052)
dangerous question, and I think the easy answer is it depends, but

Better Batch (09:59.091)
Ooh.

Nate Call (10:01.054)
The real answer is it’s a failure to follow the written procedures or documentation that support the creation of a compliant batch or a compliant production lot. And that is, you know, we use the wrong formula in the batching or compounding instructions, or we put the wrong amount of the wrong material in the wrong place, or the temperature was incorrect. Something documentation related where the on-floor production or batching compounding team followed the instructions.

but the instructions are just wrong. That happens all the time, and I’m sure you guys have seen that a lot too.

Better Batch (10:33.198)
I feel like so many of our listeners are breaking out in a cold sweat right now. Like not again. Don’t talk about it. Exactly. And I mean, this is, you know, obviously a favorite of ours from a Markov perspective because, you know, electronically enforcing like, yeah, that we got the right formula because we created the order for this product. That’s that’s our bread and butter. But but that but that side of like

Nate Call (10:41.886)
Yeah. Right?

Better Batch (11:01.986)
the instructions were there wrong in the first place. mean, that’s a fascinating one as well. Do you find it?

Nate Call (11:06.784)
It’s something that’s…

That’s hard to address too, without electronic controls, especially from the formulation perspective where we often see manufacturers just keeping track of their formulas in a Google sheet and just updating that revision number. But does the communication of that change get passed throughout the entire chain of the business? Does the batching team know that, this formula was updated. I need to pay extra close attention or does the sales team know? that, does anyone know that this changed?

you

Better Batch (11:38.72)
Yeah, well exactly. And I mean, it’s something we see sometimes, you know, at larger facilities where they’ll have two or even more than two different versions of the process depending on the size of batch and therefore the equipment they’re going to use. And then the smaller manufacturer will have just one and they won’t necessarily dawn on them that they need a second one where they’re going to, you know, replace a piece of equipment for a better piece of equipment that they just leave the procedure, right? But it doesn’t work anymore, right? Yeah.

Do you find these kind of errors happen more often or I guess sooner in size with co-manufacturers? That’s something we’ve seen where the spread of revisions and the spread of recipes are so much bigger that they run into this at a sooner revenue level.

Nate Call (12:21.82)
I think it is a pervasive issue throughout all revenue tiers of manufacturers. think for smaller manufacturers, I would say it happens more often, but the impact isn’t quite as severe because your batch sizes are smaller, you have smaller production lots. But at the end of the day, mean, it’s a human error game. Systems can fail, processes can fail, people are fallible and will fail from time to time, but…

If I’m a $5 million contract manufacturer, I’m probably running three to 10,000 unit production runs doing that kind of volume. But if I’m a $150 million manufacturer, I could be cranking out 150,000 bottles a day with my eyes closed. And so the issues are orders of magnitude larger at the larger contract manufacturers. And I’ve seen destruction, authorizations.

come across my inbox where we’re the fractional head of quality and.

You know, I could see a rejected batch value that cannot be reworked. That’s, know, $250,000 or 175 or 350. And it’s just, it passed that irreversible stage in the manufacturing process. And it is what it is. You can’t rework it. You can’t sell it. It’s a loss and it sucks, but it’s a great opportunity to really dig into your systems, dig into your processes and understand how this happened. Doing the root cause analysis has to happen.

those scenarios.

Better Batch (13:53.422)
We’ve talked about, the three of us have talked about this elsewhere too, how you have a, an ERP can help enforce, a manufacturing execution system can help enforce following the procedures. Companies that don’t have that but are still succeeding, preventing these kind of errors, what are they doing?

Nate Call (14:16.788)
They have great double and triple verification processes. I think that is the absolute cleanest way to make sure that, you if you don’t have the luxury of using a system like Markov or something else, or you don’t have an electronic quality management system, let’s at least build a stage gated process where we have approvals that have to happen at certain stages and we internally audit that process constantly.

That is the best way to stay on top of change management at the end of the day as well. you know, in our call earlier, Peter, you know, we talked about how I’ve seen a hundred million dollar plus manufacturers and brands even operate inside of Google Sheets or SharePoint. And they do it well because they have the right stage gates in their processes. And it’s not too complex.

Better Batch (15:08.942)
It sounds like it’s solved by labor then, right? It’s like, okay, we have Nate and Peter and Alex all working together on this. Yeah, it’s expensive, but good. Yeah, and if I’m understanding this right, Nate, it’s, okay, we want to control this by having a double check we’re using the right formula, and then confirm we’re using the right weight with a second signature, and then also find some kind of analytical testing way to confirm that, yes, it looks right from a pH and viscosity perspective.

Nate Call (15:13.694)
Yeah, absolutely.

Nate Call (15:20.202)
Yep.

Nate Call (15:38.016)
Right, exactly.

Better Batch (15:38.638)
And then the organoleptic one is there as well. So you’re layering on all of those extra checks to cover the fact that any one of those checks might not be executed. Am I right? the added redundancy is what solves it? Yeah.

Nate Call (15:50.932)
Yeah, absolutely. I think it also, the success of those processes really boils down to

having a strong technical team who can do a risk assessment that is meaningful, not a very simple, basic run of the mill risk assessment, but really dig into the process and let’s do a failure mode and effects analysis. Let’s see where the holes in our processes truly are, call those out and let’s have two to three mitigation strategies in place. Let’s have three fail safes here where even if this verification step fails, I still have two more right behind it that will catch those failures.

And that can be a blend of physical observation and the double verification signatures. It could be an in-process control test like pH, viscosity, solubility, something like that. There are a lot of simple things you can do. And it’s labor. It’s cost. But the alternative is worse.

Better Batch (16:49.484)
Yeah. And I feel like there’s like a culture piece on the floor there that takes some time, but it’s so important to put in. Where we see it, even when rolling out an electronic system, a batching operator scans the first drum, and it says, you can’t use it for reason x, y, z. they’re like, I got one of these errors.

don’t read the error, scan the next one. Now I can pour the first one. Like, my god, we lovingly showed you this error message that says you can’t do that, and you just perceive that as a hurdle to step over. And anyways, not to shock people, but even with a system, you’ve got to overcome that cultural piece of this matters, it matters to read the message and understand it and execute it. so, yeah. We should make that font bigger. Yeah, yeah.

Nate Call (17:21.941)
Yeah.

Nate Call (17:37.01)
When I make it loud, play a sound. Yeah. No, it’s, I think those types of issues are very common and always boil down to a culture of quality issue and the war of minds between operations and quality where I think in your example, Alex,

Better Batch (17:40.884)
Zap them with an electrode somehow. Yeah.

Nate Call (17:58.74)
The batching operator, they want to make the batch so they can hit their KPIs. They can do what they were expected to do that day. Maybe not understanding the effect that that has throughout the process, right? Where me scanning different drum could cost a hundred grand. Yeah.

Better Batch (18:12.477)
Mm-hmm. Mm-hmm. How do you help? And they’re messing up inventory. Yeah, like they’re messing up quality. They’re messing it up for the warehouse in terms of the accuracy of the inventory. mean, it’s terrible. So yeah, to your point, it’s getting them to understand the damage they’re doing, right? It’s like, yeah, it’s not just about speed anymore, guys. It’s like, this is important and management’s sitting down with them, so. How do you manage that?

Nate Call (18:24.96)
Sure.

Better Batch (18:37.758)
the battle between, because obviously they’re all working for the same company, helping operations and quality bridge that gap between departments to make sure everyone’s pulling in the same direction.

Nate Call (18:49.534)
I think a lot of it boils down to alignment where we often see very siloed quality teams who kind of have their blinders on and they’re only looking at GMPs. They’re only thinking about, you know, FDA requirements or Health Canada requirements, wherever they are.

they can’t pull themselves out of that silo enough to understand what the big picture is. And the big picture is we need to profitably manufacture products that are not going to harm someone. And as long as you can align on those North stars, of course there are margin attribution requirements and everything like that, but

You have to align on the mission, vision, and values of the business, and that starts at the top. That is a CEO down issue. If your CEO cannot communicate what their expectations are, other than, know, I want EBITDA improvements, I want to improve shareholder, blah, blah, blah, blah, that is meaningless to the quality team.

Tactically, how are we going to do that? And how can the quality team be an ally for operations who is actually the group executing and doing these things? We should be.

an enablement tool, not a hindrance to the ops team. We should find every possible way to make their life better every single day, not how can I ruin the ops managers day today because we got in an argument about this in process adjustment I had to make or a deviation I had to do doesn’t work.

Better Batch (20:23.79)
Yeah, I feel like by its nature, the quality team, their job involves oftentimes friction with other departments. You mentioned ops. I think there’s also friction there with sales and marketing. Where do you see the biggest points of friction come between quality as an outsider coming in or the internal teams? how do you overcome that?

Nate Call (20:38.762)
Sure.

Better Batch (20:49.998)
From the perspective of someone who might be listening to this who is a quality leader at a production facility and wants to helpfully make these changes and they’re running into resistance, what can they do?

Nate Call (21:00.328)
I think the issue there is, you know, historically and institutionally in a lot of established businesses, quality is viewed as a roadblock, not a valuable team. Their job is to pass audits and make sure we keep our certifications active so we can continue doing what we need to do. But I think again, it really does boil down to how can we be helpful to other people? How can we

Be good quality people as far as ensuring we’re delivering a safe product. It’s not going to harm anyone. It matches the label. We’ve done the right testing and we can prove that all of those things have happened. If we’ve accomplished that, almost any other process you have inside the quality system, maybe it doesn’t need to be there.

Maybe you are creating work for yourself because your team is bloated, which is another issue we always see. Maybe not always, but we often see at manufacturers and even brands who have what we would really consider a broken process and a broken system. They fill and kind of plug those holes with people and the people make it worse nine times out of 10.

Better Batch (22:15.246)
It’s a good place to explore. You guys come in as fractional quality experts. A company will bring you in and get you guys to take a look at their system. And I feel like a lot of the times it’s solved by extra people and it becomes bloated, just like you said. Help us understand a little bit more.

How can a company know their quality team is loaded? Maybe let’s start there. If I run a factory, how do I know I’ve got too many people on my quality team?

Nate Call (22:49.472)
It’s a good question and you know, there are numbers that have been thrown around for forever since I started in the industry 15 years ago where

Someone at some point said your quality unit should be 8 to 12 percent of your total enterprise headcount and that number from my perspective and understanding is based in no science and nothing real, right? think it’s great if you have hundred people that have 8 to 12 who are you know quality whatever but

Better Batch (23:13.326)
Sure.

Nate Call (23:21.664)
The biggest red flag that I commonly talk about is your quality team is bloated when you have a lot of people on the team, but nothing seems to get done. That is the number one way to know your team is bloated and the team is bloated because your processes suck and you need to go through a process rationalization exercise to make sure that.

everything inside the quality system and everything they touch makes sense and it should be there and it should be done and we need these people to do these things and oftentimes that’s not the case. We find a lot of non-value added processes and tasks and kind of these side quests and know rabbit holes people are falling down and you know I’ll tell this to any executive who will listen quality people and any person in a business

will create work for themselves if they don’t feel like they have enough to justify their presence in the business. So if you hire me and you say, okay, Nate, I want you be the quality manager, but you have a VP of quality, a director of quality, two quality supervisors, all of these other people, you already have too many layers in that organization. So my role is now to manage red tape.

and to make sure that I put the red tape in the right places so I can be of value in terms of getting that red tape removed so a process can proceed. We need as few people as possible to do exactly what we need to do, which is delivering a safe, high-quality, truthful product to the consumer.

Better Batch (24:57.55)
So this is really interesting in talking about that bloat. In every department we work with, bringing in systems which are really there, I mean, to help make people’s lives easier and more efficient, people often think like, okay, well, if I no longer have to spend half of my time just keeping paper records and organizing them, like, what am I gonna do? And that can give a feeling of fear and, like you said, a feeling of need to justify. And we always say, hey, you know, now that your time is freed up,

you can do level two tasks instead of these level one tasks. From your perspective for the quality department, what are the level two tasks? If a quality person has their time freed up and they’re no longer doing these basic tasks, what can they do to show value within an organization that’s actually productive?

Nate Call (25:45.173)
I think if we can eliminate and automate a lot of those kind menial tasks where I’m dragging this PDF and putting it in this folder, those types of things.

The time you gain from doing that should really be spent becoming an industrial quality person. And I think in CPG especially, I often see a lot of homegrown quality people who started on the production floor, they were a quality inspector, they had the eye, so to speak. They could spot something from a mile away and fix it and that person of it sends into a supervisor, gets maybe a little bit of training, probably not.

boss leaves and boom they’re the quality manager now and they don’t really understand what they’re doing they’re out of their depth they’ve never had any root cause analysis training continuous improvement training anything like that and it’s it’s difficult

to know how to make an impact for those people. And that’s often where we see a lot of bloat come from is I don’t know what to do, so I’m gonna hire more people. But the tasks that they should actually be doing are failure mode and effects analysis.

root cause analyses, continuous improvement initiatives, internal audits, making sure the systems that you have are actually functional versus pushing paper around or saying, I’m just prepping for an audit. You should never have to really prep for an audit if you have a good quality system in the first place. You may stage some documents, but you should never have to drop everything and prep for two weeks and clean everything up right out of the gate.

Better Batch (27:22.678)
Yeah, I I love I’m sorry. No, you go ahead. I was just gonna say yeah, I love that because like as you were just alluding to like if if I as a quality leader can look across the products I make and say like look our average like you know batch gets reworked two and a half times and like what’s the worst defender and like I can cut this down and now and like now 75 % of the time it’s like first pass approved. And.

we can run the math and do the ROI on that and see like, I just saved all this money because, that feels like such a, like just incredible thing to deliver. And I’m no longer saying like, yeah, I’m rejecting this batch. I’m saying like, look at all these batches that are no longer being rejected because of these improvements we’ve weighed in. It’s just like, that’s just so exciting to me to think of that perspective, yeah.

Nate Call (28:12.606)
Yeah. No, that’s, that’s a great call out. And, and I think if I were recommending to kind of a greener quality person, kind of that, that person who became the supervisor, their boss left now they’re the quality manager. If you focus on no other metric, focus on cost of quality and cost of poor quality.

those are some of the most impactful metrics for the business and are a very good signal of health for the quality system where if you have reworks, if you have to cut a manufacturing run short because you ran out of labels or you have bright stock and all of these other random things, there are so many opportunities to improve the manufacturing process that

from my perspective, kind of pay off the quality team where we’re often considered a cost center. And I know Alex, you and I have actually talked about this a lot where I think a good quality team should be a value creation center where we are creating a ton of value. We are tightening processes, which can absolutely be uncomfortable for operations where we say, no, your tolerance that was this big.

is now this big and if we can get it right here this is the financial impact it will have on the business. You’ve been complaining about this machine that sucks for two years? Great, here’s an opportunity to tighten that tolerance, recover some of those lost dollars, pay for your equipment. You can find so many pennies inside of a manufacturing facility and hundred dollar bills too that are just laying around because no one has paid attention to them. There’s a lot of opportunity.

Better Batch (29:50.862)
I think it would be super valuable for our audience to just hear you unpack for a minute what cost equality as a metric is all about. If you could just explain a little bit about how I would get to that number, how I’d use that number, that’d be super valuable.

Nate Call (30:08.596)
Yeah, I think a good way to think about cost of poor quality first is costs associated with things that have gone wrong. So that could be a rework, that could be a retest, any type of rejection. You have to touch something twice, anything that goes through the process that does not.

you know, win that first pass release badge, so to speak, that is your cost of poor quality. All of the negative outcomes of the quality system that’s failing. Cost of quality is really…

your overhead largely, right? The quality team itself is part of cost of quality. It’s appraisal costs is what they call it, where that’s your testing, that’s your inspection, other things like this. What are the preventative measures that the quality team has in place and what are the costs associated there? Those could be things like environmental monitoring, a consulting firm fee, anything like that. That is cost of quality, but also, you know,

Internal and external failure modes need to be included here as well. What are external factors that should arguably be placed inside that cost of quality, cost of poor quality bucket and internal factors as well, right? Where

you have turnover inside your team or you have this documentation issue or this equipment went down because the maintenance process failed. To me, that should be a cost of poor quality. I know that’s not really a direct answer to the question, but kind of very high level, whatever the quality team does has a cost associated with it. We’re not earning the business any dollars in most cases.

Nate Call (31:59.252)
Yeah, there’s a lot to unpack and a lot of newer equality managers are kind of afraid about tracking cost of quality and poor quality because it’s a financial metric and they’re not finance people. So they don’t understand how to do this and they don’t understand as a percentage what the cost of quality should be in a healthy business.

And that number has an asterisk next to it for sure, but if you have a very tight ship, your cost of quality is one to 3%. If you don’t have a tight ship, it’s higher than that, or you have additional controls because you’re a high quality, premium luxury business and your cost of quality is three to 6%. There’s nothing inherently wrong with that, but we can’t pretend that those are not numbers we should be measuring and thinking about.

Better Batch (32:31.21)
Mm-hmm.

Better Batch (32:43.021)
Mm-hmm.

Better Batch (32:51.054)
Absolutely. No, I love it. And so tracking along to be sure I understand it sounds like something like customer complaints, right? We should try to figure out, you know, what is the cost of a customer complaint, right? Is this mean they’re no longer a customer? What does that cost us? You know, what is like the support desk? You know, what’s the burden upon them to work through it? And like, okay, now, like, if we can cut those complaints down, here’s how much money we save. Am I thinking about this the right way in terms of the cost of poor quality? Yeah.

Nate Call (33:17.758)
Yeah, for sure. I think complaints are a good example as well, where, you know, I mentioned side quests, wild goose chases, complaints can be a side quest in a wild goose chase where

You know, a certain complaint may make its way to the CEO who panics and thinks, shoot, I have this major issue, massive fire drill for everyone. have 20 people attacking this issue. Skipping to the end of the complaint investigation, you spent 20, $30,000 on labor because one person said the color of their capsule was off and it was tan instead of beige or something like that, something stupid.

Better Batch (33:53.208)
Yeah.

Nate Call (34:00.994)
are an interesting one and we see a lot of issues in how

Brands especially manage complaints where you have the customer service team could be hundreds of people, right? The escalation process for complaints is almost always broken on the brand side if they don’t have a quality team. We’re not doing the investigations we need to be doing. And the investigations we are doing don’t result in any real value to the business and they don’t really protect the consumer. We’re not paying attention to the right things, the right trigger words.

Better Batch (34:29.518)
Mm.

Better Batch (34:36.174)
How do you decide then, I mean, if I’m a CEO and I see a complaint come in, I want to take that seriously. How do I, as that CEO, decide this is a complaint worth investigating or we should give up on this particular one? How can you make that decision before you spend $30,000 on labor investigating?

Nate Call (34:57.226)
To me, it’s kind of a two-part answer. The first part is anything that is safety related, I am dropping everything and I will spend my entire day, my entire week, my entire month trying to figure out what happened if someone said, I took this product and two hours later I was getting emergency gastrointestinal surgery or something like that. Like that’s a real complaint that I investigated two months ago. Those things happen. Those are complaints where let’s do the fire drill. Let’s make that happen.

Better Batch (35:26.766)
Yeah.

Nate Call (35:27.17)
happen, but it’s a data game where one complaint may be statistically insignificant and when you’re selling tens of millions or hundreds of millions of units every year.

I’m not going to drop everything to investigate one complaint that is 0.00006 % of total units sold. I’ll make a note of it in our complaints log and we’ll track that. We’ll trend it and see, okay, maybe we actually do have an uptick here. That’s a signal something went wrong in the manufacturing process. That’s an opportunity for us to improve, but.

Better Batch (35:48.846)
Sure.

Nate Call (35:59.594)
We have to understand what we call a characteristic complaint is for a specific product. If you have a gut health product, you’re going to get gut related complaints where this made my stomach hurt. I had diarrhea or in a more serious way, I threw up and I became so dehydrated that I went to the emergency room and I had to get an IV. You may have people that react so poorly to certain products that

It’s really an issue. I don’t want to say an issue on the consumer side, but there are hypersensitive consumers to some of the strongest dose dietary supplements, especially where they’re always going to have issues. They could try a thousand different brands of the same product and just annihilate their gut all day long. I think the same is true of beauty as well, where if you have sensitive skin, you have sensitive skin and things will affect it. Right. I have sensitive skin. see a little red spot.

Better Batch (36:44.206)
Mm-hmm.

Nate Call (36:59.314)
right here like it is what it is stuff like that happens and it’s a trending game it really is we have to pay attention to the complaints trend them classify everything and if we do determine based on data there’s an issue we’re investigating we’re taking action but we are not always going to investigate every single complaint that hits our inbox we’ll review them but maybe not investigate

Better Batch (37:23.785)
Gotcha. Yeah.

It’s interesting, I feel like complaints are a good place to ask you about communications between brands and contract manufacturers that work for them, right? Because complaints go to the brand, right? And then, so what would be, for you, best practice around a brand and a contract manufacturer to collaborate around complaints and how they get escalated back to the production team’s quality department?

and that back and forth communication.

Nate Call (37:58.464)
It’s a good question and I think it largely depends on the relationship between the brand and its contract manufacturer. For example, I once worked for a brand to a multi-billion dollar company, thousands of complaints a month, thousands and thousands of complaints across a hundred plus countries. And it seemed very chaotic. And originally what we did is every week at Friday at 1159 PM Mountain Time, you’re going to get an auto-generated report of

every single complaint we got, including the lot number, the nature and description of the complaint. And I want you to investigate everything all the time. The amount of pushback and rage we experienced from our contract manufacturing partners in doing that was insane. And really taught me that a contract manufacturers

Better Batch (38:39.821)
Mm-hmm.

Nate Call (38:54.624)
should not be investigating one-off complaints if there’s not a consumer safety issue. Similar story, let’s make a note, let’s trend, let’s pay attention to it, but we’re not going to give ourselves a fire drill because someone had 121 tablets instead of 120 tablets inside this container. That is not worth our time investigating. That’s within our allowable tolerance, right? And I think the escalation and communication pathway

Better Batch (39:12.878)
Mm-hmm.

Nate Call (39:22.964)
that needs to be established within your quality agreement in terms of, you know, what criteria have to be met in order for the contract manufacturer to investigate. Because when I ran contract manufacturing sites, I’d have brands complain periodically about things and I’d…

would review the complaint, maybe pull a quick batch record and historical complaint data and say, okay, we don’t actually have an issue here. The retains look good, batch record looks good. I think we’re in good shape. Thanks for letting us know. We’ll keep an eye on it and pay attention to this. That is the best way from my perspective.

Better Batch (39:54.86)
And guess easy access to retains, easy access to batch records just make that so much smoother, right, to be able to respond quickly. What does it look like when a company hires you to come in and be the fractional quality group?

Nate Call (40:02.59)
Yeah, absolutely.

Nate Call (40:14.076)
It depends on the level of maturity inside the organization where if we walk into a brand, especially who has experienced CPG operators, they have a good marketing team. We have the right.

spiritual kind of guide rails in place already where maybe they don’t quite know what the wrong thing is, but they definitely know we can’t say this. They have that type of experience. We typically just do a gap assessment of their institutional processes against what we would consider industry best practices and any regulatory requirements that they should be complying with. And based on that gap assessment, the outcome is really that action plan that I mentioned earlier, where if you

fix these things over the next 90 days or spread that to six months, nine months a year, whatever.

you’ll have a good quality system and you will satisfy all of the requirements that you need to satisfy. And that kind of becomes a fork in the road for us of, we’ve assessed your systems and we’ve given you an action plan. Fork in the road is, can you tackle and do these things yourself or do you need us to do it or want us to do it? Even if you can, maybe you don’t want to and you just want to lean on a quality team like ours.

And that’s often where we find ourselves after brand gap assessments, so on the manufacturing side, just because it is important to have as much on-site presence as possible to truly be an effective fractional quality team. For example, we’re based in Salt Lake. I have a few Salt Lake-based manufacturers where I am their VP of quality. I’m popping in once a week, every two weeks, a couple days a month, whatever the case may be, to make sure that

Nate Call (41:57.392)
I have control over the system and I am being fed everything I need to eat to understand what’s happening inside the business. But I think a good way to think about the fractional relationship is this. We talk about bloated teams and bloated processes.

You can have 12 amazing quality people in your org chart, and those 12 people could have a fully burdened annual cost of one and a half million dollars, $1.8 million plus or minus a few hundred thousand. What those people can do, kind of looking at it through an 80-20 rule where 20 % of the people are doing 80 % of the work, we only hire that

kind of 20 % crowd, so to speak, where we are laser focused on what we’re doing. We are not bogged down by operational noise. We’re not going to these all hands meetings, singing kumbaya, making s’mores with people. We’re getting the work done. That is all we are focused on, is getting the work done, holding ourselves accountable, holding the business accountable. And the same is especially true on the manufacturing side where…

We are building a plan together, hell or high water, regardless of any headwinds or resistance we face, we were engaged by the executive team to do this and we’re going to do it. And if you want to kick and scream, kick and scream, but it’s going to happen. This is what the business wants to have happen.

Better Batch (43:24.942)
Yeah, yeah, yeah. So one question I had was, is there an issue, maybe one or two points that you guys discover so often when you get contracted by a manufacturer that you would say, okay, before you call me, go fix these two things and then come back, right? Is there anything that’s that high in prevalence?

Nate Call (43:52.508)
Absolutely, and I think our top 10 list is the exact same top 10 list the FDA has. The number one issue we always see is failure to follow your written procedures. And we see so often, regardless of manufacturer size and maturity gaps in that area where the process you’re doing in practice may actually be a lot better than what you have written down.

Better Batch (44:03.65)
Mm-hmm.

Nate Call (44:18.548)
but you’re still gonna get slapped around by us or by the FDA because your SOP says you’re doing something different. That is the number one symptom of a broken system.

Better Batch (44:24.427)
And

And what’s the fix for that, guess? it standing out there often enough to say you’re not following, or is there, I’m just curious, what would be the go-to solution for that big problem?

Nate Call (44:40.126)
I think the kind of gut reaction is internal audits and being on the floor. We see a lot of manufacturers who have their quality team offices inside kind of the corporate office section of the building. I want the entire quality team to be out on the floor or very close to the noisy floor, hearing all of the clinking and banging and dropping of things. I want them to be

Better Batch (44:46.382)
Yeah

Nate Call (45:09.214)
where the magic is happening because the worst thing a quality leader can do in my mind is put on their suit and tie, walk into their office, spend 10 minutes a week on the production floor just yelling at people saying, this sucks, you need to be doing this, you need to be doing that because they’re surprised that these things are happening and they can’t figure out why. It’s because they’re disengaged. If you are engaged as a, yeah, spend time, be with the people, talk to production.

Better Batch (45:31.298)
They should spend, wear that beard net, right?

Nate Call (45:37.972)
Yeah, wear that beard nut for sure. And I always give people an example of, know, in a past life where I was the director of quality at a manufacturer here, we had an issue where we had a very tacky bulk product that we just could not clean off the inside of this tank. And, you know, we tried all of these different types of cleaning chemicals and solutions and different ways of doing things.

Better Batch (45:58.702)
Mm-hmm.

Nate Call (46:07.528)
And no one could figure out why we couldn’t clean this tank effectively. Like it was taken out of commission because it could not be cleaned. Only to realize that no one had actually climbed inside the tank to clean it. They just stuck their arm down with a wand and were spraying stuff around trying to scrub it with like a deck brush, stuff like that. And I get it, going inside of a thousand gallon tank is scary. It’s a confined space. There are OSHA implications there and you need your buddy up top to make sure you don’t fall down and die.

There are all of those factors, but that’s the kind of stuff that you won’t ever figure out unless you go to the floor and observe what’s really happening where, you know, I had had that issue for a few weeks and I was like, all right, I’m just going to watch them do it and see what they’re actually doing. And I climbed inside the tank, blasted it, cleaned it. We were good. And that became the new process. Updated SOPs, work instructions, forms. All was well after that.

That is what quality leaders should be doing.

Better Batch (47:08.59)
On the flip side of Alex’s question, you go into a gap analysis. Is there a common thing that you’re giving them in terms of feedback that manufacturers don’t want to hear? You’re like, make sure you do this. You’re like, oh, OK. Do your homework. You’re like, oh, I really don’t want to do my homework. What are those things that they push back on, that kind of advice?

Nate Call (47:31.808)
Training. It’s almost always training where we walk into a site and say, okay, based on our observations, there’s clearly a knowledge or education gap here related to whatever standard we’re trying to comply with. You need to get ISO 22716 training. You need to do it. We can do it for you. You can do it yourself.

Better Batch (47:51.468)
Why push back on that though? What’s the, know, as manufacturer, yeah, it’s expensive.

Nate Call (47:55.546)
It’s almost always time driven, where they feel like they don’t have the time to dedicate to that level of training and learning. And that’s the vicious cycle of manufacturing in my mind. And quality really is.

If you don’t have the right systems in place, you’re in a constant state of fire drills. The fire drills dominate your time. Everything is an emergency. You can never get anything done. And that will never change until you make time to fix those problems. And that starts with having a good foundation of knowledge. And if you don’t have that, you are just wasting time in your business.

Better Batch (48:37.132)
Yeah, Nate, we see the same thing trying to implement systems and software sometimes where it’s like, this is going to give you a 20 % efficiency boost. It’s like, OK, great. This sounds good. wait, what do you mean I have to shut down production while we learn how to use it? But it pays for itself after one week. Yeah, but we can’t shut down production, right? It’s like, well, sometimes you painted yourself into this corner. And to get out of it, yeah, you might have to do that briefly, right?

Nate Call (48:58.868)
Yeah, for sure.

Nate Call (49:06.047)
And I think it’s kind of the same story that and same situation, I guess, that I run into pretty often where what we do is not cheap. mean, we’re not as expensive as your one and a half million dollar quality team by any stretch of the imagination, but we’re not forty nine dollars an hour kind of McDonald’s special quality people. are from our perspective, the best of the best. And we lose deals sometimes purely based on cost and.

Better Batch (49:19.726)
Mm-hmm.

Nate Call (49:35.036)
Every now and then I’ll get a call from someone that said, Hey, we connected nine months ago. You gave us this proposal. Timing wasn’t right. Let’s reconnect. Let’s reengage. And in those conversations, they had a quality event that happened. A lot was rejected and had to be destroyed or maybe something was held at customs for so long that it was too close to the expiration date that it had, you know, had to be rerouted and come back or something like that.

Better Batch (50:03.022)
All right.

Nate Call (50:03.872)
all driven by the absence of the processes we were trying to convince this business to create and deploy. And that happens all the time where our engagement, say it was $50,000, could have prevented this $150,000 issue you’re now facing. Now you’re just gonna come back and have to pay us anyway and probably more because we have…

Better Batch (50:12.789)
Mm-hmm, yeah.

Nate Call (50:29.982)
The same project initially we were trying to do with you, but then we have to triage the actual quality event that happened. So the cost just balloons exponentially.

Better Batch (50:39.266)
Well, at least now we get to prevent the next quality cost, you know, nine months down the road. It’s still worth it. At some point we got to it. Yeah. Yeah.

Nate Call (50:44.222)
Yeah, for sure. And I like to tell people too, you know, we’ve been doing this a really, really long time. I’ve been to something like eight or 900 manufacturers all over the world. We have a really good network of partners that we use.

understanding what we do is expensive, let’s find you some low hanging fruit opportunities to save money. Let’s consolidate your testing into a single lab where you now have better economies of scale in your own right in addition to us where you may now send half a million dollars of testing to know lab one, two, three. But when we introduce you to that laboratory, the lab knows that

While this may be 500K, there’s also $10 million of other business that Qualitas is bringing to them. And so we can help you negotiate a lot of different ways to save cash. And I try to tell people, let’s find a way to pay for this engagement before it’s over. Let’s save you some money.

Better Batch (51:39.406)
This is probably a good place to almost wrap up or a nice kind of conclusion. What kind of things can organizations do to save money on the quality side? Your example of negotiating bulk testing rates with a place, fantastic. What else is there?

Nate Call (52:02.304)
I think that the lab spend opportunities is almost always the first one that I call out because it’s the easiest, largely. The other cost saving opportunities are really driven by process rationalization, where if we can eliminate a process, an unnecessary process, we’re eliminating labor, we’re eliminating materials, we’re eliminating resource needs from this business. Now we can put those resources in a different area that will make money.

for the business. I think that it’s not a direct answer to the question, but that is largely the approach we take is let’s trim the fat out of this process and out of the business and focus on what really matters. And once you can start doing that, like earlier in the conversation, killing the level one tasks, going to level two, that’s what the intent of that exercise is for us is.

value added tasks. If we are adding value, are increasing EBITDA. We are making improvements for the business happen.

Better Batch (53:00.75)
Mm-hmm. I’m not out of questions, but I’m pretty sure we’re out of time. I was going to say, like, I have so many more. It’s just been so informative,

Nate Call (53:12.532)
Yeah, no, always a pleasure. Happy to chat quality anytime and next time we can do an eight hour podcast and just rally through it.

Better Batch (53:18.638)
Yeah, people will love it with extra long commutes. So where can people get a hold of you, Nate?

Nate Call (53:27.02)
I am always on LinkedIn, all day, every day, posting two, three, four, five times a day. But you can find us at myqualitymanager.com. My email address is nate at myqualitymanager.com. We have a team all over the US. You’ll find us at trade shows, find us at events, find us at a manufacturer near you. We always have people out on the road and it’s not hard to bump into us if you’re in the, CPG space.

Better Batch (53:52.942)
Amazing. Thank you so much for joining us, and it’s been great. Thank you.

Nate Call (53:56.234)
worse thank you guys

Better Batch (54:00.578)
Okay, and now the recording stops.