How To Choose Which Factory Audit You Need?

A common piece of advice we give to customers is to undertake a factory audit when vetting new suppliers.

There are a number of different types of factory audits that you may consider, though, so which is right for you?

Why is performing a factory audit so important for importers?

As part of the new supplier vetting process, a factory audit helps you to evaluate a potential supplier’s reliability, capabilities and warns you of any key risks that might prevent them from meeting your needs. You can then use the audit report to help make the decision on whether to work with them or not.

👉 Related: Listen to our podcast series on vetting new suppliers.

Selecting the right factory audit

We’ve created this flowchart to help you make the right selection:

Let’s go through this flowchart in order…

1. Is it even possible to send an auditor to the factory right now?

In 2020 and 2021, there have been many disruptions in Asian manufacturing countries due to the coronavirus pandemic, but also political tensions in the case of Myanmar, for example, too.

To this day many factories do not admit visitors such as factory auditors or quality inspectors to protect against the spread of Covid-19. For instance, right now in China (May 31, 2021) there has been an outbreak in Shenzhen, our HQ’s location, which has put manufacturers on alert and curtailed travel out of the city to many neighboring provinces.

So, what happens if you can’t access a supplier’s factory?

We are able to perform an ‘E-audit’ where we remotely review the supplier’s key SOPs and most meaningful records and confirm that they have a quality system (even if going on-site can provide a much more complete picture). This will likely include video calls with production supervisors in order to understand what they’re doing and see live evidence of the factory’s work.

In addition, in some countries, such as China, some helpful business information about the supplier can be gathered in the government databases, as a complement to an audit.

Benefits of e-audits:

• Fast
• No travel expenses
• Low cost

Learn more about what we would do remotely in this kind of audit in this blog post and we can also perform off-site product inspections for the same reason, too.

2. Will the supplier accept being audited?

If you are planning to place an order that is very small for the manufacturer, they are likely to decline your request to be audited as the disruption isn’t worth it to them.

Also, if their product is very “hot”, with greater demand than there is supply (think PPE like nitrile gloves and face masks), they are also likely to decline due to not needing to accommodate you in order to get sales.

So, how to get some helpful information about the supplier in these situations?

A good compromise is to suggest a “factory visit”. It can still be done by a professional auditor who can take advantage of being on-site to ask some questions and gather some evidence, but without following the structured approach of regular audits. They will then prepare a light report with some useful information for you to use to make the decision.

This is like a ‘light’ audit that is less stressful and more likely to be accepted by suppliers in this position.

3. What do you want to check when on-site if an audit is accepted?

This is probably the most important thing to decide for buyers.

a) The quality system:

We commonly distinguish between 3 cases when auditing suppliers:

1. Small factories that haven’t implemented their own systems don’t need to be evaluated on all the traditional criteria — they will be made to look bad, but they may actually be a good fit for relatively small buyers.
2. Factories that pretend to have a quality management system (they might hold an ISO 9001 certification, for example) can be assessed in more depth.
3. And, when the buyer wants an evaluation of the factory’s manufacturing processes and various good practices, the situation calls for a process management audit. The focus is on whether they know what they are doing.

Oftentimes a Quality System Audit (QSA) is used where the quality system is being checked. If you prefer to conduct an Initial Factory Evaluation (IFE) this also includes a brief overview of the quality system, too.

b) Social compliance:

• Sometimes all the focus is on social compliance (no child labor, no forced labor, above minimum wage…). If you sell your goods to a retailer that has its own program, that retailer’s standard is usually the basis for the audit checklist.
• Sometimes the customer also wants an evaluation of the quality system. It can be a “blended systems audit”.

c) Readiness:

Sometimes the key concern is the manufacturer’s readiness to take a certain order (based on their in-house production capacity, their supply chain, their validation of a new product…)

d) More types of audits

There are many other types of audits — environmental impact, supply chain security, building structural strength, and so on and so forth.

4. Should you audit once or set up an ongoing auditing program?

When qualifying a potential supplier, auditing once during this process is probably going to be fine (again, an Initial Factory Evaluation is a good solution depending on how technical you want to go).

But if you’re planning to work with the supplier for some time (especially if they’re a key supplier), it will be wise to keep an eye on what’s happening with their business and go back in and audit them annually.

Maybe their No. 1 customer leaves them. Maybe the opposite is happening, and they are growing very fast. How do their systems and practices hold up?

Another reason to set up a program is to push a factory to improve its processes & systems, with what is commonly called a layered process audit.

5. Explore the different types of audits mentioned

We offer factory audits in China and across SE Asia and India. We explain each in detail here including their key features and pricing:

• Initial Factory Evaluation (IFE) – Sofeast’s auditor qualifies or disqualifies a potential supplier based on their manufacturing capabilities before you start working with them. We also evaluate risks associated with potential suppliers, such as: Non-existent quality system, no maintenance, inadequate equipment, incorrect or false information given, etc.
• Quality System Audit (QSA) – Sofeast’s most popular China factory audit! One of our auditors qualifies a potential supplier based on their manufacturing capabilities and quality system (key requirements from ISO 9001) before you start working with them, or to assure that current suppliers are improving over time. It confirms that their organization and quality system is in place and effective.
• Blended Systems Audit (BSA) – A BSA is a great factory audit to choose when assuring a factory’s reliability is key, but when you also need to know that they have policies in place to be socially compliant.
  Sofeast’s auditor qualifies a potential supplier based on their capabilities and their compliance with social, safety, and environmental standards before you start working with them, or assures that current suppliers are improving over time.
• Social Compliance Audit (SCA) – This factory audit focuses on safety, respect of the environment, and legal compliance. Sofeast’s auditor qualifies a potential supplier based on its compliance to social (close to SA 8000 + local law), safety, and environmental standards before you start working with them, or to assure that current suppliers are improving over time.
• Process Management Audit (PMA) – In a PMA audit, we spend more time looking at the technical aspects of production, and less on the more traditional “quality management system” aspects. The work is nearly all done on the production shop floor. If a factory says they have a solid process & product control plan, a PMA audit is a good opportunity to check it in detail and to comment on it.
• Layered Process Audit (LPA) – In a Layered Process Audit program, our auditor re-audits your supplier’s processes and quality systems by focusing on one key aspect per month. Rather than trying to examine all kinds of quality systems and processes in one day, the auditor makes a plan to systematically examine each one in-depth per month which maximizes the opportunities to identify and correct any problems or inconsistencies.

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More resources you can read and listen to about factory audits on this topic…

Here are some more resources about factory audits that you might find interesting:

• The Importance Of On-Site Factory Quality Audits [Podcast]
• The Real Purpose of Factory Audits? Evaluate and Prevent Risks
• Factory Audits and Product Inspections: Similarities and Differences
• How Factory Audits, Inspections, and Lab Tests Fit Together
• Brands and Retailers: Please Stop Doing Social Compliance Audits in Asia
• Quality Audits VS Process Audits
• How do factory audits work in China [Infographic]
• How are factory audits conducted and what is evaluated?
• Vetting Suppliers In China [Podcast Series] – this series of podcast episodes includes several about factory audits that are worth listening to!