How to Set Up a Quality Agreement with Your LED Therapy OEM Factory

A quality agreement is different from a manufacturing contract. The contract covers commercial terms (price, delivery, IP). The quality agreement covers who is responsible for what when it comes to product quality. Without one, quality disputes become finger-pointing exercises. With one, there’s clarity on accountability.

We learned this the hard way. A batch of 2,000 LED masks had a 6% defect rate. We blamed the factory. The factory blamed our specification. It took 3 weeks to resolve, during which production was stopped. A quality agreement would have answered the question in 30 minutes.

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## What a Quality Agreement Covers

**A quality agreement defines:**
1. Who is responsible for each quality activity
2. What standards and specifications apply
3. How quality issues are investigated and resolved
4. What records must be maintained
5. How changes to the product or process are managed

**It’s especially critical for:**
– FDA 510(k)-cleared devices (quality agreements are required under 21 CFR 820)
– EU MDR-certified devices (quality agreements are expected by Notified Bodies)
– Any OEM relationship where the buyer’s brand is on the product

## The Quality Responsibility Matrix

**The core of the quality agreement is the responsibility matrix — a clear delineation of who does what:**

| Quality Activity | Factory Responsibility | Buyer Responsibility |
|—————–|———————-|———————|
| Incoming component inspection | ✅ Perform inspection, report results | Define acceptance criteria, review reports |
| In-process quality control | ✅ Perform IPQC, maintain records | Audit IPQC records, approve process changes |
| Final quality control (OQC) | ✅ Perform OQC per AQL sampling | Define AQL levels, review OQC reports |
| First article inspection | ✅ Produce first articles, provide test data | Review and approve FAI, sign off before production |
| Nonconforming material handling | ✅ Identify, segregate, and disposition NC material | Approve disposition, verify corrective action |
| Corrective and preventive action (CAPA) | ✅ Investigate root cause, implement CAPA | Review CAPA effectiveness, approve closure |
| Change control | ✅ Notify buyer of any process or component change | Approve changes before implementation |
| Complaint handling | Provide technical investigation support | ✅ Receive and log complaints, determine reportability |
| Recalls and field corrections | Cooperate with investigation and execution | ✅ Initiate and manage recall process |
| Record retention | ✅ Maintain production and quality records for 7 years | Define record requirements, audit compliance |
| Audit access | ✅ Provide access for buyer audits | ✅ Conduct periodic audits |

**The principle:** The factory performs the activity. The buyer defines the standard and verifies compliance.

## The Specification Documents

**The quality agreement references these specification documents (attached as schedules):**

| Document | Purpose | Who Creates | Who Approves |
|———-|———|————|————-|
| Product Specification | Defines the product — dimensions, materials, performance | Buyer | Buyer + Factory |
| BOM (Bill of Materials) | Component list with part numbers, suppliers, alternates | Factory | Buyer |
| Quality Plan | Inspection points, test methods, acceptance criteria | Factory | Buyer |
| Test Protocols | Specific test procedures (electrical, optical, mechanical) | Factory | Buyer |
| Sampling Plan | AQL levels, sample sizes, acceptance numbers | Buyer | Factory acknowledges |
| Labeling Specification | Label content, placement, and verification | Buyer | Buyer + Factory |

**Every specification document is version-controlled.** Changes require written approval from both parties before implementation. This prevents the “we changed the LED supplier without telling you” scenario.

## The Change Control Process

**This is the most important section of the quality agreement.** Uncontrolled changes are the #1 source of quality problems in OEM manufacturing.

**Change categories:**

| Category | Examples | Approval Required | Lead Time |
|———-|———|——————|———–|
| Major change | New LED supplier, housing material change, firmware update | Buyer written approval | 30 days minimum |
| Minor change | Component supplier change (same spec, different vendor) | Buyer notification, approval if requested | 14 days |
| Administrative | Documentation update, label correction | Buyer notification | 7 days |
| Emergency | Safety-related change required by regulation | Buyer immediate notification, retrospective approval | Immediate |

**The change control clause:**

> “Manufacturer shall not implement any change to the Product, its components, manufacturing process, or quality control procedures without prior written approval from Buyer for Major Changes, or prior written notification for Minor Changes. Buyer shall respond to change requests within 10 business days for Major Changes and 5 business days for Minor Changes. Emergency Changes may be implemented immediately with retrospective approval within 5 business days.”

## The Nonconformance Process

**When a quality issue is discovered:**

### Step 1: Identification and Segregation

The factory must:
– Immediately stop production of the affected product
– Segregate all potentially affected units
– Notify the buyer within 24 hours

### Step 2: Investigation

The factory must:
– Determine the root cause (using 5-Why or Ishikawa methodology)
– Assess the scope (how many units are affected, what batches)
– Determine if affected units have already been shipped

### Step 3: Corrective Action

The factory must:
– Implement a corrective action to prevent recurrence
– Submit a CAPA report to the buyer within 10 business days
– Re-inspect affected inventory after corrective action implementation

### Step 4: Verification

The buyer must:
– Review and approve the CAPA report
– Verify corrective action effectiveness (through next-batch inspection)
– Close the CAPA when effectiveness is confirmed

## The Audit Clause

**The buyer must have the right to audit the factory:**

> “Buyer shall have the right to audit Manufacturer’s facility, quality systems, and production processes with 10 business days’ written notice. Audits may be conducted by Buyer’s personnel or by an independent third-party auditor appointed by Buyer. Manufacturer shall provide full access to production areas, quality records, and relevant personnel. Audit findings shall be documented and shared with Manufacturer within 15 business days. Manufacturer shall respond to audit findings with corrective action plans within 30 business days.”

**We conduct audits:**
– Before signing a contract with a new factory (qualification audit)
– Annually for active factories (surveillance audit)
– After any significant quality issue (for-cause audit)
– When required by regulatory authorities (compliance audit)

## Quality Agreement vs. Manufacturing Contract

**They serve different purposes and should be separate documents:**

| Aspect | Manufacturing Contract | Quality Agreement |
|——–|———————-|——————-|
| Focus | Commercial terms | Quality responsibilities |
| Typical length | 15-25 pages | 10-15 pages + schedules |
| Legal weight | Governs the business relationship | Governs quality accountability |
| Who signs | Business leaders | Quality leaders |
| Regulatory relevance | Limited | Required for FDA and EU MDR |
| Change frequency | Rarely amended | Updated with each product change |

## What We’ve Learned

1. **A quality agreement prevents finger-pointing.** When a defect shows up, the agreement tells you who investigates, who approves corrective actions, and who pays for the rework.

2. **Change control is the most important clause.** Most quality problems start with an unauthorized change. The change control process prevents the factory from making substitutions without your knowledge.

3. **Specify your AQL levels in the agreement.** Don’t leave quality acceptance criteria to verbal agreements. AQL 1.0 major / 2.5 minor should be in writing.

4. **Include the audit clause.** If you can’t audit the factory, you can’t verify that they’re following the quality agreement. The right to audit is non-negotiable.

5. **Update the quality agreement when the product changes.** Every product revision should trigger a quality agreement review. New components, new processes, and new specifications all need to be captured.

A quality agreement with your LED therapy OEM factory is the operating manual for your manufacturing relationship. It defines who does what, how quality issues are handled, and how changes are managed. Without it, you’re relying on trust — and trust doesn’t survive a 6% defect rate. Put the quality responsibilities in writing, get both parties to sign, and use the agreement as the reference when things go wrong. Because things will go wrong. The question is whether you have a framework for handling it.