Supplier audit “MUSTs” for securing supply chain

Selecting the right suppliers is crucial for any manufacturing business. They play a vital role in the quality of your finished products, the reliability of your production timeline, and even in upholding your company’s reputation. To ensure you’re partnering with dependable and competent suppliers, conducting regular audits is essential.

This article provides a comprehensive supplier audit checklist for quality assurance in the manufacturing industry. It covers key areas to evaluate before, during and after an audit, and it helps you identify potential weaknesses in your supplier’s operations. ¡Read to learn more!

Understanding supplier quality management

Supplier quality is a pivotal aspect of quality management, directly influencing an organization’s ability to achieve and surpass expected outcomes for products and services. It encompasses processes such as supplier audits, quality assurance, and quality control, all aimed at ensuring that suppliers consistently uphold established quality standards. 

Supplier quality management begins with thorough evaluations and audits, which help organizations assess the capabilities, reliability, and compliance of their suppliers with industry-specific and internal standards. Supplier audits serve as the foundation for transparency, improvement, and collaboration between manufacturers and suppliers.

Effective supplier quality management benefits organizations in multiple ways, including: 

• Cost reductions associated with fewer defects and minimized rework
• Enhanced customer satisfaction through improved product reliability
• Strengthened supplier relationships that contribute to supply chain resilience

Supplier audits

A supplier audit is a systematic process used to evaluate and verify a supplier’s compliance with established standards, regulations, and contractual requirements. Its primary purpose is to ensure that the products, services, or materials supplied meet the organization’s quality expectations and contribute to a reliable and efficient supply chain. 

There are four categories of supplier audits: 

• System: These evaluate the implementation and effectiveness of the quality management system (QMS), such as ISO and Six Sigma.

• Process: These assess the operational aspects to identify bottlenecks, inefficiencies, and non-compliance from a quality and safety perspective.

• Product: These inspect the finished product to check if it meets all the quality specifications, regulatory standards, and customer requirements.

• Capacity: These verify that the supplier can manufacture the required product or provide the required service within the specified timeframe.

Pre-audit preparation

Before heading to the supplier’s facility, ensure you’re well-prepared. Here’s what to do.

• Define your objectives: Establish clear goals for the audit. Are you primarily concerned with quality control? On-time delivery? Social responsibility? Having a defined focus will help you tailor your questions and observations.
• Review supplier information: Gather existing documentation like supplier agreements, quality certifications, and past performance records.
• Prepare an audit checklist: Use the following checklist as a starting point and customize it based on your specific needs and the type of product you manufacture.

Supplier audit checklist

From technical capabilities, inventory management, and supply chain logistics to social and environmental responsibility, we’ve got you covered. Take these aspects in consideration when outlining your own supplier audit checklist, according to your organization’s needs.

Quality assurance and technical capabilities

• Quality management system: Does the supplier have a documented quality management system (e.g. ISO 9001)? Are procedures clearly defined and followed?
• Quality control: How does the supplier ensure product quality throughout the manufacturing process? What inspection methods are used?
• Non-conformance management: How does the supplier handle defective products? Are there procedures for corrective and preventive actions (CAPA)?
• Calibration and testing: Are measuring and testing instruments calibrated properly and regularly to ensure accuracy in results?
• Technical expertise: Does the supplier have the necessary technical expertise to manufacture your product to your specifications?

Production and inventory management

• Production planning and control: Does the supplier have a robust production planning system to ensure timely delivery?
• Inventory management: How does the supplier manage raw materials and finished goods inventory? Are there procedures to minimize waste and obsolescence?
• Traceability: Can the supplier trace materials and components used in your product back to their source? This is crucial for product recalls or identifying quality issues.
• Capacity and scalability: Does the supplier have the capacity to meet your current and future production demands?

Supply chain and logistics

• Subcontractors: If the supplier uses subcontractors, how are they evaluated and monitored?
• Material sourcing: Where does the supplier source their raw materials? Are there any potential risks associated with the source?
• Logistics and transportation: Does the supplier have reliable transportation partners who can deliver your goods safely and on time?

Social responsibility and environmental management

• Labor practices: Does the supplier adhere to fair labor practices, including minimum wage, working hours, and anti-discrimination policies?
• Health and safety: Does the supplier maintain a safe working environment?
• Environmental management: Does the supplier implement practices that minimize their environmental impact? Are they compliant with relevant environmental regulations?

Risk management and business continuity

• Risk assessment: Does the supplier have a process for identifying and mitigating potential risks that could disrupt production or delivery?
• Business continuity plan: Does the supplier have a plan in place to respond to disruptions like natural disasters or equipment failures?

Post-audit activities

Once you’ve completed the audit it’s time to compile your findings, communicate the relevant takeaways to the supplier, collaborate to create an action plan, and verify its effectiveness. 

• Document your findings: Compile a comprehensive report outlining your observations, any non-conformances identified, and corrective action recommendations.
• Discuss findings with supplier: Schedule a meeting with the supplier to present your report and discuss your recommendations.
• Develop an action plan: Work with the supplier to develop a concrete action plan to address any identified issues.
• Follow-up: Conduct follow-up audits periodically to ensure the supplier is implementing the agreed-upon corrective actions.

Supplier audits are an invaluable tool for manufacturers to assess their supplier’s capabilities and identify potential risks. These practices are especially valuable in today’s complex global supply networks, where maintaining high standards is essential for competitive advantage. By using a comprehensive checklist and following a structured approach, you can ensure your suppliers are reliable partners who contribute to your overall success. 

But remember, this checklist is only a starting point. Tailor it to your organization’s specific needs and industry requirements for the most effective supplier audits. And of course, be aware of scheduling a demo with Kiuey to streamline the supplier audit process!