Published 6 Sep 2023
What is a Supplier Audit?
A supplier audit is a formalized system of evaluating the reliability and competency of suppliers and vendors to deliver quality service. Auditing suppliers are foundational in establishing strong customer-supplier relationships. Supplier audits aim to assess and promote smooth operations in key business areas such as manufacturing, engineering, invoicing, QA, and shipping.
In this article
- Supplier Audit Benefits
- Importance of Performing Supplier Audits
- FAQs about Supplier Audits
- Perform Effective Supplier Audits with SafetyCulture (formerly iAuditor)
- Featured Supplier Audit Checklists
Supplier Audit Benefits
Performing supplier audits can help businesses determine if their supplier’s current performance meets business operational standards. Here are 4 benefits of auditing your suppliers:
- Manage production downtime—manage the reallocation of resources more effectively and track how suppliers perform against SLAs.
- Increase profitability—manage supplier risks and quality-related costs.
- Ensure quality and compliance—determine if your supplier meets your standards by auditing their performance on a regular basis. Identify repetitive errors and potential risks in the process and develop contingency plans to solve these problems.
- Continuous quality improvement—evaluate and monitor the quality of the service and products that your suppliers provide. Gain a comprehensive overview of how your supplier performs over time.
Importance of Performing Supplier Audits
A factory audit is a formalized system of evaluating the reliability and competency of suppliers and vendors to deliver a quality service. It is foundational in establishing a strong customer-supplier relationship. The supplier auditing process aims to assess and promote smooth operation in key business areas such as manufacturing, engineering, invoicing, QA, and shipping.
With consistently high-quality products come satisfied customers, and that is the end advantage of a supplier quality management solution. It can provide better visibility into supplier risks, improve control over quality and compliance, and lead to fewer non-conformances. Aside from those, here are a few other reasons to perform regular supplier audits:
Reduce non-conformances and CAPAs issued to suppliers
For instance, Company A faces 2,000 supplier non-conformances every year. Most of these non-conformances are likely to arise because the suppliers are of high risk and low maturity, or because they are not being audited thoroughly.
The supplier audit software solution can enable Company A to onboard a higher number of mature suppliers, while also increasing visibility into each supplier’s risk profile, and streamlining factory audit and inspection processes. As a result, Company A will be well-positioned to actually reduce the number of non-conformances by almost 80%. This, in turn, will lead to fewer CAPAs, and better cost savings.
Eliminate ambiguity in supplier audit reports
What one person says is a major non-conformance, another may describe as minor – and it’s difficult to prove when the only evidence that exists is a few pages of the auditor’s hand-written notes.
The supplier audit software takes away the confusion and ambiguity by making sure evidence is gathered and attached to an audit on-site, there and then. And reports are no longer affected by bias – it’s all there in black and white when you come to review the audit.
Optimize supplier audit management
With a supplier audit software, companies can segment their suppliers based on each supplier’s risk profile. This allows them to plan and prioritize their supplier audits more efficiently, and actually reduce the number of audits that need to be performed. In other words, instead of conducting 4 audits for every single supplier, the organization needs to conduct only one audit for Group A suppliers, and two audits for Group B suppliers because these suppliers have lower levels of risk and higher maturity.
The risk profile of each supplier can be calculated in the supplier quality management solution based on the ratings from supplier self-assessments, auditor validation, historical audit ratings, number of non-conformances, and other such factors. The audit frequency will vary based on the changing risk profile of the supplier.
Promote trust with suppliers with a transparent system
By harnessing the power of a supplier audit software, communication across global supplier teams, including real-time monitoring of audit status, can be vastly improved. This can make for a much smoother and transparent audit experience, as well as provide both the client and supplier with richer quality control insights.
FAQs about Supplier Audits
Conducting a supplier audit generally consists of the following steps:
- Develop a pre-audit questionnaire.
- Put together a team to conduct it.
- Notify suppliers.
- Hold an audit open meeting to establish introductions, finalize agenda, restate purpose and scope, and determine audit schedule.
- Performance of audit.
- Hold a debriefing meeting to review observations regarding the audit.
- Create a formal report.
A supplier audit involves the following types of audit:
- System audit – evaluates who, what,where,when, and how the quality system is used in producing the supplier’s products.
- Compliance audit – a review of written documentation and evidence of compliance with work instructions, and other established QA procedures.
- Process audit – verifies if the processes in place are produced according to written procedures, work instructions, industry standards, and other guides responsible for building the product in good quality.
- Product audit – inspects finished products to determine its conformance with set product specifications and requirements.
Generally, supplier audits should be performed at least once a year and as often as required, depending on the risks involved with that specific vendor, or supplier risk profiles. A supplier audit is often considered one of the best first steps toward better supply chain management and supplier selection process, improving quality and efficiency right at the source.
For example, maintaining the quality of a certain ingredient is crucial to manufacture your product safely. If that raw material from your supplier has been compromised—negatively affecting consumers, product quality, and production process—then you should audit that vendor more frequently.
Perform Effective Supplier Audits with SafetyCulture (formerly iAuditor)
A supplier audit software is a web-and-mobile solution that allows product quality managers to better manage their potential set of suppliers or vendors and verify their factory production capability and compliance with quality standards.
With the SafetyCulture Supplier Audit Software—an intuitive digital solution for visual factory audits—there’s no need to carry reference manuals and paper checklists during site visits. You’ll only need a mobile device to ensure that products are up to the safest standards for public use. This digital solution also allows you to do the following:
- Ensure consistency in your potential suppliers by converting your paper checklists into mobile-ready inspection forms that can be used across all your audits.
- Access audit history and statistics to easily observe trends, identify areas of improvement in the process, and resolve issues through actionable insights.
- Review analytics reports by supplier site, area, or region so you can quickly see what to focus on.
- Store data in a secured cloud technology so that information is kept safe and available only to the right people.
- Integrate SafetyCulture with the other apps or platforms you already have for monitoring and managing your suppliers.
Get started by downloading these quality control plan templates and supplier audit checklists for your business. All SafetyCulture templates are fully customizable and you can even create your own—no programming skills required!
Featured Supplier Audit Checklists
A vendor audit checklist is used to ensure that the vendor’s quality management system (QMS) meets business requirements and standards. This checklist can be used by vendors to document and report any non-compliance to quality standards. It has 99 items and has been built to help the inspector to perform the following:
- Conduct a site walkthrough in the warehouse or production
- Use this template as a guide to identifying any risk detected
- Assign actions to responsible teams concerning urgent issues that may arise during the audit
- Complete the inspection with a digital signature and timestamp to validate the audit
A supplier quality audit checklist can help managers evaluate if the current QMS, context of your organization, operation, quality control, and product improvement complies with the ISO standard. Browse this collection of useful digital templates for suppliers and vendors to prepare for ISO 9001 certification.
Manufacturing companies can utilize this ready-to-use checklist to ensure that their suppliers are effectively managing raw materials and product packaging. This supplier audit template is customizable and can be tailored to your specific needs.