Tag: factory audits

Whether you’re sourcing abroad, or from a manufacturer down the street, similar issues with product quality, shipment delays, cost and safety concerns, etc. still apply.  To mitigate the quality risks and cost involved in sourcing, we recommend five actions that have been proven successful throughout the three decades of experience we have working with clients and suppliers around the world.

1 – Audit Potential & Existing Suppliers 

To help ensure that potential or existing suppliers deliver high-quality products, operate efficiently, and support continuous improvement, process surveys and factory audits are performed.

From supplier capability and qualification to process control and quality system audits, there are a wide range of options.

We continue to see an increase in requests for social responsibility audits and are pleased to see the growing commitment in this regard.  Aside from reducing quality risks and cost, ensuring social responsibility improves quality of life and ultimately affects the quality of products being produced as well.

Principles of social responsibility per the ISO 26000 guideline include:

• Accountability
• Transparency
• Ethical behaviour
• Respect for stakeholder interests
• Respect for the rule of law
• Respect for international norms
of behaviour
• Respect for human rights

“The SA 8000 standard is based on the UN Declaration of Human Rights, conventions of the ILO, UN and national law, and spans industry and corporate codes to create a common language to measure social performance.  It takes a management systems approach by setting out the structures and procedures that companies must adopt in order to ensure that compliance with the standard is continuously reviewed.”

The nine elements of the SA 8000 standard include:

The first Monday in September is observed as Labor Day in the United States, which is a national holiday celebrating the contributions of workers.  Similar holidays are observed throughout the world.

Today, Samsung announced issues at several factories in China, indicating age disparities and other health and safety concerns.  They are committing to an evaluation of 144 suppliers before the end of the year, using documentation as a way to verify conformance to local regulations.  Apple and many other multinationals are facing similar issues and are working with NGOs, industry organizations and other 3rd parties such as Pro QC to improve supplier conditions and stakeholder confidence.

We have written several articles relating to on-site and verified social audits and are finding the request for such services are steadily increasing throughout the world.  Organizations of all  sizes and throughout industries are realizing the benefits of proactive supplier management in this regard.

Benefits of ensuring worker’s rights through social audits include:

Human Resources – Recruitment & Retention Benefits 
Higher employee morale leads to greater rates of retention, which cuts the costs of recruiting and training new staff. In addition, a growing trend in recruitment appears to be concern regarding a company’s corporate social responsibility activities.

Increased Product Quality & Safety
Reducing defects and accidents enhances product quality. A less fatigued and adult workforce is less likely to cause accidents or defects on the production line. In addition, a supplier that shows little concern over health and safety is more likely to produce poor quality products.

Risk Management 
Proactive corporate responsibility offsets the risks of scandals or accidents that can create unwanted attention from consumers, regulators, government or the media.

Brand Development
Investing in a socially accountable supply chain benefits a company’s brand by differentiating from competition and building a positive reputation in the minds of consumers.

Stronger Management 
Providing training, defining responsibility and developing manuals will strengthen the management of the company.

Government Intervention 
If businesses take voluntary steps to ensure social accountability, they are more likely to avoid mandated government regulation and taxation.

For additional information regarding the components of social audits, read our full newsletter article.   The American Society for Quality, through theSRO, has recently issued the latest Pathways to Social Accountability as well, which always includes several relevant and convincing case studies.

Performing factory audits to assist in supplier selection or throughout the production cycle is a primary contributor to a reduction in both sourcing risks and cost.  While specific standards often apply, such as the ISO series, factory audits do have several key components in common.

1) Management 

Who is the management and what management style is generally supported within the corporate culture?  Through observation and interviews, an audit reveals attitudes and general values that serve as indicators of the overall organization’s realized performance.

“One of the greatest lessons I’ve learned over the past couple of decades, from a management perspective, is that really when you come down to it, it really is all about people and all about leadership.” ~Steve Case

2) Metrics –

Show the data.  Suppliers should be able to back-up any claims with supporting data that can be reviewed and verified.  The specific metrics vary depending on a number of factors, but identifying those factors and making sure suppliers are following through with documentation and review is critical to any industry.

“90% of making the correct decision is gathering information.”

3) Corrective Action

No one is perfect.  But, the difference lies within how an organization handles nonconformaties, or any service affecting issues that may occur.  Having paperwork on-hand is an excellent start, but suppliers should demonstrate through training and observation that staff consistently follows through with procedures.  Also, how is the supplier tracking trends and making necessary process improvements?

“For every failure, there is an alternative course of action. You just have to find it. When you come to a roadblock, take a detour.” ~Mary Kay Ash