5 Types of Factory Audits That Will Help You Assess Suppliers

by | Jul 2, 2019 | Factory Audits, Product Safety, Quality Control, Sourcing

Managing the supply chain for a retail brand can be challenging.

You need to properly vet potential suppliers and ensure that current suppliers have the systems in place to continue producing quality products.

You also need to be sure that your products are free of ethical, security, or regulatory concerns.

Audits allow importers to assess their supply chain. They help determine whether manufacturers are meeting, or will be able to meet, the needs of their organization.

They can be used as a tool to help you decide on new suppliers or get a better look at exactly what is going on at your current partners’ facilities.

What is an Audit?

According to ASQ (American Society for Quality), an audit is:

“The on-site verification activity, such as inspection or examination, of a process or quality system to ensure compliance to requirements.”

Large retailers may require you to conduct specific audits. They may even conduct their own audits of your suppliers periodically.

It makes sense to get a head start and ensure that the components of your supply chain meet their (and your) standards.

Audits can serve as a key part of your sourcing process, giving you valuable information as you evaluate potential manufacturing partners.

Let’s discuss 5 types of audits.

#1 Capability Audits

Want to know if a supplier has all the equipment and resources in place to produce your products?

Spool of material inside a yoga mat factory

Spool of material inside a yoga mat factory

A capability assessment will help you see if they do. It will help you to verify whether they have the capability to make your product and can deliver it on time. It will help you to ensure the long-term success of your business relationship.

Conducting this type of audit can be useful when you are considering new suppliers, so you can decide on who to partner with for the long term.

But how do you know if they have the proper resources in place to manage quality?

#2 Quality Audits

The purpose of a quality audit is to measure the effectiveness of a manufacturer’s Quality Management Systems (QMS).

An auditor evaluates the supplier in accordance with ISO 9001 standards. These standards help determine whether they have “a strong customer focus, the motivation and implication of top management, the process approach, and continual improvement,” among other things.

Conducting this type of audit helps you determine whether they have the systems in place to ensure quality for the long haul.

But how do you ensure the security of your supply chain?

#3 Security Audits

A security audit helps you ensure compliance with C-TPAT (the Customs-Trade Partnership Against Terrorism) in the United States.

C-TPAT is a supply-chain security program led by U.S. Customs and Border Protection.

The program is a way for the CBP to “work with the trade community to strengthen international supply chains and improve United States border security.“

Importers who participate in the program see a reduced number of CBP examinations, shorter wait times at the border, and a number of other benefits.

Conducting C-TPAT audits helps importers assess the security of their supply chain and take measures to ensure compliance with the program.

But how do you know if your supply chain is free from human rights violations?

#4 Social Compliance Audits

Social audits are conducted to assess the working conditions present at your factories and look for human rights violations that impact your supply chain.

Earrings in the hands of QC person

QC person at a jewelry factory inspecting earrings before plating

These audits are conducted based on the SA 8000 standard. They focus on workplace health and safety, child and forced labor, working hours and wages, discrimination, discipline, management systems, and dormitories if provided by the factory.

Conducting these audits helps importers ensure a socially responsible supply chain.

But, aside from social concerns, another common concern for retail brands is their environmental impact.

#5 Environmental Audits

Environmental audits are conducted to see whether a supplier is engaging in environmentally-friendly practices and complying with environmental laws and standards.

The ISO 14000 family of international standards plays an important role in these audits.

Manufacturers are assessed to determine if they have appropriate systems and controls in place as part of their environmental management system. Emissions, energy usage, and more are looked at during these audits.

Conducting them allows retail brands to ensure that environmental risk is being reduced.

Audits Help You Assess and Improve Your Supply Chain

Factory audits are very helpful when considering new suppliers or assessing current ones.

They provide you with a snapshot of exactly what’s going on at your factory at a particular moment in time.

Capability, quality, security, social and environmental audits play different roles and can be used at different times. By understanding how they work, you can choose the best audit for any given situation.

Audits help you build quality into your products so that consumers will have a positive experience with them. This helps you see better results in the marketplace.

For more information about how to build quality into your products, we recommend reading the following white paper.

Price vs. Quality: What You Need to Know

When you’re making products to sell in the marketplace, you have to consider the tradeoffs between price and quality. Sometimes, producing better quality products can lead to paying a higher price for manufacturing.

Download our free white paper, Price vs. Quality, to learn how to produce great quality while keeping your costs low.

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