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.

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:

1. Manage production downtime— manage the reallocation of resources more effectively and track how suppliers perform against SLAs.

2. Increase profitability— manage supplier risks and quality-related costs.

3. 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.

4. 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.

What to Include in a Supplier Audit Checklist

A comprehensive supplier audit checklist ensures thorough evaluation of supplier capabilities to maintain quality, safety, and regulatory compliance, and reducing risks in the supply chain. Here are the essential items to include in your checklist:

1. Management Responsibility : Confirm senior management’s active role and commitment to quality and food safety systems.

2. Infrastructure : Ensure facilities and equipment are adequate, well-maintained, and compliant with requirements.

3. Sanitation : Verify an effective sanitation program with documented cleaning, pest control, and waste management.

4. Personnel Practices : Check personnel hygiene, training, and use of protective equipment meet standards.

5. Handling, Storage, & Delivery : Assess procedures that prevent contamination and maintain product integrity throughout handling and transport.

6. Traceability and Crisis Management : Confirm full product traceability and a documented crisis response plan with clear roles and communication.

7. Food Safety and HACCP Systems : Verify implementation and upkeep of HACCP plans and food safety controls.

8. Manufacturing Quality Systems : Ensure a documented quality management system controls production, documentation, and supplier evaluation.

9. Regulatory Consideration : Confirm compliance with all relevant laws, certifications, and labeling requirements.

Here is a sample report for reference:

Supplier Audit Evaluation Form Sample PDF Report | SafetyCulture