All You Need to Know About Factory and Supplier Audits

Customers expect top-quality products and manufacturers need to assure they are being produced to the best standards. A trusted technique in checking whether a manufacturing process is under control is to conduct a manufacturing audit. Manufacturing audits are a comprehensive inspection of the process to ensure it is performing correctly.

Auditing takes places on-site and includes inspection or examination to ensure compliance and an audit can be applied to an entire organization, the end manufacturing process or to any specific production step. A manufacturing audit should be conducted to assure that the procedures are reflected in actual practice, to help uncover any inaccuracies so they can be corrected quickly, to ensure the consistency of a process, to demonstrate a proactive approach to improvement, and to encourage ongoing corrective actions.

What is a factory audit?

A factory audit is a standardised process used by quality managers to determine if a supplier conforms with the required business standards while delivering high-quality products and services. Performing regular factory audits involves evaluating the supplier’s quality management system (QMS), their organization, the production processes and ensuring compliance with safety measures.

Factory audits need to evaluate productivity: a reliable supplier should deliver products on time and meet order quantities. They should examine all workflows during production, track how much time was spent to produce the finished products and assess the efficiency of the machines and manufacturing equipment used.

They also need to measure quality control within the supplier’s existing QMS, to ensure that work quality is set to a satisfactory standard and effective monitoring procedures support continuous improvement.

Regulatory compliance is also necessary when conducting a factory audit as business requirements and certifications often extend to suppliers too. Supplier non-compliance could put your own business and certifications at risk.

Factory audit checklist

The key criteria for factory and supplier audits are facilities, policies, procedures and records, all of which should verify the factory’s ability to deliver consistent quality products over time or for certain individual products.

The major checkpoints of standard factory audits include:

  • Manufacturers background
  • Manpower
  • Production capability
  • Machine, facilities and equipment
  • Manufacturing process and production line
  • In-house quality systems such as testing and inspection
  • Management system and capability
  • Environment

What is a supplier audit?

A supplier audit is an effective way to examine the quality of a particular supplier and the potential risk of non-compliance it presents to the organization before it becomes an issue. Companies can also improve their quality standards by ensuring their suppliers maintain product quality and delivery standards at acceptable levels. Supplier issues can cost companies money or may harm their customers. Effective supplier quality management solutions such as supplier audits are an effective and efficient way to identify any problems in the production cycle early.

Supplier audit checklist

The quality of the final product depends, in part, on the quality of your suppliers and a quality audit can uncover any noncompliant materials and will give you a plan to ensure conformance to industry standards.

The major checkpoints of a supplier audit include:

  • Company legality information
  • Bank information
  • Human resource
  • Exportation capability
  • Order management

How to evaluate your supplier

Audits are a vital part of the customer-supplier relationship and they aim to check and improve the current quality and delivery processes and can be used as a key tool for the yearly supplier evaluation.

They can ensure a functional and efficient QMS is established including ensuring documentation of optimization processes are clear, supplier risks and quality-related costs can be reduced, and the communication between customers and suppliers is strengthened resulting in a win-win for both the supplier and manufacturer.

Firstly, you should gather all the information and documents that have been exchanged between you and the supplier and all content should be reviewed and evaluated. Then an audit event should take place and lastly, an audit follow-up meeting should be arranged which includes a final meeting with the supplier.

Difference between a factory audit and an inspection

Factory audits and inspections are different, but both very important to your supply chain. Audits include capability assessments, quality assessments, security assessments, and compliance audits while inspections usually help to manage the existing company and supplier relationship. 

Audits can be useful when considering a different factory to produce your products and can help you to choose a long-term supplier. Compared to inspections, which are generally about how things are currently being run.

Factory audits give a high-level view of how a factory operates and how they can ensure that high quality products are produced: you can view their capability over the course of many shipments. Whereas an inspection is only about one particular shipment.

Also, audits can ensure a factory meets relevant standards for health and safety, child labor, working hours, and management.  A professional visit to the factory for these audits can help to make better sourcing decisions. However, inspections are usually conducted with factories that you have already established a relationship with.

To conclude, audits can help you to make long-term decisions and also help you decide which suppliers to work with to ensure you get the best results over a period of time. But using a mixture of both inspections and audits in your quality control program is also important.

About HQTS

HQTS can provide a comprehensive factory and supplier audit service to ensure you gain a detailed analysis of the condition, strengths, and weaknesses of your current supplier.

We can provide energy audits to ensure energy conservation is being achieved and sustained long-term, factory production control which can help ensure constancy of product performance and reduce the risk of importing products that aren’t compliant. Environmental audits can offer you credentials to ensure compliance with national and international policies and regulations. HQTS also provides social compliance audits, manufacturer audits and building safety audits. Read more about our audit service here and contact us for more information or any questions you may have.


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