Supplier Audit – Advantages of Supplier Audits and Case Study

Advantages of Supplier Audits and Case Study

Supplier selection and monitoring can be challenging. A purchasing manager must sort through the sea of possibilities to identify the few superior suppliers among the many subpar, fly-by-night operators. Then comes the task of continually checking on supplier performance. Additionally, a company must consider the requirements of quality management systems such as ISO 9001, IATF 16949, and ISO 13485 in supplier evaluation, selection, and monitoring.

When implemented in the supplier selection process, a supplier audit can help prevent production delays and product defects. It provides confidence in supplier reliability up front and gives crucial early insight into the supplier’s quality management system (QMS). This article will describe the function of a supplier audit, present Pro QC’s suite of supplier audit solutions, and showcase a Pro QC client that fixed a major risk to their business because of the findings of a supplier audit.

What is a supplier audit?

A supplier audit is a third-party check on the supplier’s production capability and quality assurance practices, or a quality management system. It can be as fast and cost-effective as profiling of factory legitimacy, or as exhaustive as a quality management system audit.

Assessing suppliers accurately while keeping auditing costs under control is best done with a supplier evaluation funnel. In this approach, a large pool of potential suppliers is winnowed down using audit and development tools that lead to a long-term partnership with a small group of rigorously selected and developed suppliers.

What are the advantages of supplier audits?

A supplier audit is used to verify a supplier complies with your requirements. These requirements may relate to:

• Selecting a new supplier
• Involving a supplier in a continuous improvement initiative
• Verifying supplier reliability
• Verifying the supplier production capacity and equipment
• Categorizing the supplier into low/medium/high risk to better allocate company resources
• Strategic supplier quality planning
• Monitoring the implementation of a corrective action plan
• Identifying noncompliance and risks that could impact production and quality

Ensuring compliance with industry standards, QMS, and health, safety and environment (HSE)

Pro QC’s range of supplier audits

Pro QC’s suite of solutions includes the following audits along the supplier selection funnel:

• A supplier verification is an early step in the supplier selection process. It is applied to a large pool of potential suppliers and involves factory profiling. In other words, asking basic questions about factory legitimacy and whether they produce what they claim to.
• A supplier quality audit is a next and crucial part of this process. A supplier audit is rapid but comprehensive one-day assessment of any factory’s quality assurance practices. This audit and the supplier assessment provide purchasing managers and quality personnel enhanced data and transparency on the best practices at each factory or supplier. It can then be used to inform the final decision on whether to confirm the purchase order.

The supplier quality audit is a general assessment of the potential supplier’s operations and quality capability. It answers questions such as whether specifications and work instructions are in place, independent QA/QC is established, a corrective action system is present, and defects are identified and isolated according to procedure. The audit comes after a larger group of suppliers is verified. It comes before a more exhaustive quality management system audit and before targeted audits of manufacturing processes.

When deployed in this supplier selection process, a supplier quality audit prevents production delays and product defects. It assures supplier reliability up front and gives crucial early insight into the supplier’s quality management system.

• A manufacturing process audit is a focused assessment of the factory’s production line specific to the client’s product.
• A QMS audit helps a client determine the supplier’s suitability for long term partnership. It involves a deep dive into the supplier’s quality management system and a comparison to the specific requirements of global or industry-specific quality standards such as ISO 9001, IATF 16949, and ISO 13485.
• A supplier development audit is done after this exhaustive evaluation. It is conducted to support a long-term production partnership and ongoing efforts to improve the factory’s overall performance.

Our teams of auditors support clients throughout Asia, Africa, the Americas, Europe, and Middle East with supplier audit services. We are proud of the value we offer clients through our tailor-made solutions. Our range of supplier audit services include:

• Quality Management Audits: ISO 9001, ISO 13485, 21 CFR 820, EU GDP, 21 CFR 210 & 211, ISO 22716, ISO 14644, ISO 11135, IATF 16949, ISO 17025, ISO 22000
• Social Compliance Audits: SA8000, RBA, BSCI, EICC, SMETA
• Occupational Health & Safety Audits: ISO 45001
• Environmental Audits: ISO 14001, RoHS
• Supply Chain Security Audits: C-TPAT, GSV, SCAN
• Process Audits: Manufacturing Process Audit, VDA 6.3 process audit
• We can also follow our client’s internal checklist

CASE STUDY – Supplier Quality Audit in Poland

A client wanted to start business with a mechanical parts supplier in Poland but needed assurance that the company could answer their project requirements in terms of quality, reliability and capacity. Pro QC conducted an on-site Supplier Quality Audit covering the following elements:

• Management Responsibility
• Document Control
• Purchasing
• Product Identification and Traceability
• Quality Assurance / Process Control
• Packaging
• Control of Non-Conforming Parts & Rework
• Corrective Action

The audit report identified high risks and gave an overall supplier audit score below 55%. The essential quality management subsystems of Management Responsibility, Document Control, Purchasing, Quality Assurance / Process Control, were scored below 35%.

Among the findings:

• The supplier did not have clear procedures in the QMS to ensure that quality, performance and planning are moving in the same line, making it hard to examine their exact quality management system in the first place.
• The supplier had not created an organizational chart adequately detailing the company’s roles and responsibilities. There were also no instructions on trainings or training plans. One positive audit finding was the presence of documents on proficiency checks, possible improvements and standards.
• The supplier lacked a clear procedure to ensure its own suppliers are selected based on their ability to meet customer requirements, as well as by reviewing their business practices and quality systems.

The audit report outlined substantial risks of doing business with this supplier. They traced back mainly to the supplier’s lack of real experience in international business.

The audit identified major problems and the quality management system was deemed unacceptable. Using this supplier was likely to have a negative impact on client product quality. Because of these findings and recommendations from Pro QC, the client decided to proceed with another supplier avoiding costly mistakes down the road.

Contact

Pro QC provides supplier audits to assess the reliability and risks of your potential and existing suppliers. We are ready to partner with your team to ensure your suppliers uphold your company’s goals.

Contact us to get our insights on your supplier audit project.