As the average business’ global supply chain continues to expand, it’s never been more important for organizations to monitor the quality of their vendors and suppliers. It takes just one underperforming supplier to wreak havoc on your bottom line and potentially even your reputation. This is why you must be prepared to take action if a supplier consistently fails to meet your expectations.
But how do you keep close tabs on your suppliers, especially when you employ tens, if not hundreds, of them? The answer is a supplier audit.
A supplier audit is a detailed examination and critique of your supply chain process. It analyzes the performance of every one of your suppliers, and identifies any gaps in things like quality and shipping that may be causing disruptions like deviations or delays.
A supplier audit is often conducted by an external inspection company. But don’t worry if you don’t have the resources to bring one on board. It’s also typical for organizations to task a team of procurement or quality assurance professionals to conduct an audit.
If this is the route you choose to take, however, you must know how to follow the Supplier Audit Checklist Rating System. In this article, we’ll explain what exactly this is, and give examples of the best questions you can ask your supplier as part of your evaluation.
Understanding the Supplier Audit Checklist Rating System
When you evaluate different areas of your supplier’s processes and procedures, you will score each of those areas and answers on a scale of 0 – 5 with an option of N/A for questions that do not apply to the supplier.
Lower scores indicate serious issues in your supplier’s production processes, finished products, or social scores. If a supplier has failed to meet the specified requirements, you need to think of a plan. When your supplier fails the audit, you might want to have them work on a plan to improve specific areas, or you might want to consider finding a new supplier altogether. This can help you avoid problems with customer satisfaction and your own production processes.
If the supplier’s performance score is high, it indicates that they are a strong partner and an important part of your supply chain. You can work on improving relations with that supplier to maintain their business for procuring raw materials and helping you meet your customer requirements.
The following is a breakdown of the typical rating system used in a supplier audit:
N/A: Not available or not able to be evaluated
0 – Major Non-Conformity: Major discrepancies and the absence of proper procedures. This rating requires a corrective action plan to fix the discrepancies noticed.
1 – Minor Non-Conformity: Some discrepancies and errors need to be corrected with an action plan.
2 – Acceptable: The protocols and procedures in place are enough to pass the audit, but there is still room for improvement. You can create an improvement plan to address these issues.
3 – Good: The procedures in place are good, but there are potentially minor needs for improvement. You can still implement an improvement plan to allow the supplier to increase their score.
4 – Best Practices: All procedures are in place as needed, with no room for improvement.
5 – Outstanding: All procedures are followed above and beyond the requirements in place for performance.
Supplier Audit Checklist Items To Include
Now that you understand what a supplier audit is and what the ratings will tell you, it’s time to put together your questions and plan what areas you want your audit to cover. Keep in mind that you are looking for objective evidence about your suppliers to help you understand if they are still a good fit for your business. You can give them some time to prepare for the incoming inspection or make it a surprise. Just make sure that you record the inputs you receive.
Questions About Quality Assurance
One of the most important aspects of auditing your suppliers is understanding their quality assurance measures. Customer satisfaction hinges on your business’s ability to get the best raw materials and products from your suppliers. Here are some important questions to ask in your audit to accurately measure the quality assurance programs of your vendors.
Quality Policy Sample Questions
- Do you have a quality manual to clearly define your production procedures?
- Do you have an action plan for quality improvement in case of a discrepancy?
- What are your policy indicators for meeting your quality goals?
Quality Management Sample Questions
- Do you have a supervisor on staff for quality control?
- Is there a strategy in place for continuous improvement in your quality management practices?
- Do you have an organization chart displayed for employees?
Quality Related Certifications
- Do you have any certifications related to quality management?
- If so, how many do you have and how recently were they obtained?
- Are there any certifications that you are missing or haven’t been able to pass?
Quality Maintenance Questions
- What basic maintenance procedures are in place to test equipment and machines?
- What system of maintenance do you follow– preventive or proactive?
- Is your equipment operating in good condition, or are there frequent breaks and shutdowns?
Quality Training Questions
- What quality assurance training do you give to your employees?
- What training programs or knowledge courses do you offer employees to do their jobs more efficiently?
Quality Production Questions
- What strategies do you have in place to improve your manufacturing processes?
- Do your employees follow the correct shift procedures to ensure product quality?
- Where are production lags occurring in your processes?
SA8000 Checklist Items (Social, Health, and Safety)
SA8000 is an international certification standard that is used to help organizations create and implement socially acceptable practices in the work environment. These standards include social, health, and safety acceptance criteria that businesses should strive to meet. Here are some great questions to ask to ensure that your suppliers are meeting this standard.
Child Labor and Underage Workers
- How do you guarantee the correct age of your employees?
- Do you utilize child labor or source materials from companies accused of child labor?
- How young are your typical workers?
Discrimination or Forced Labor
- Is there any evidence or open cases regarding forced labor or discrimination in your business?
- Is there any physical, corporal, or mental coercion occurring in your company?
- What steps are you taking to ensure that there is no forced labor in your factories?
Freedom of Association
- Are your workers represented by a union or worker representatives?
- What procedures do you have in place for lodging complaints?
- Have you ever discouraged your employees from unionizing?
Hours Worked Weekly
- How much overtime do your workers log on a daily basis?
- Are there limits to how many overtime hours your employees can have?
- How are you tracking your work hours and documenting overtime?
Remuneration
- Does your company offer social insurance?
- Is there any reserve on overtime payments?
- Is your company meeting minimum wage requirements, and is that documented?
Safety and Health
- Are your fire policies, building certifications, and hygiene requirements properly displayed?
- Is your building currently up to code?
- Are there proper working conditions, like drinking water, bathrooms, and break areas?
Miscellaneous Questions to Add to Your Supplier Audits
While quality assurance and SA8000 are the most important areas to include in your audits, there are a few other categories of miscellaneous questions that you will want to make sure you include in your audit. These include areas like your vendor’s environmental sustainability and legal procedures — which can significantly impact your business.
Environmental Questions
- How are your waste, byproducts, and hazardous materials stored, treated, or disposed of?
- What are the air emissions from your factories?
- What strategies are in place to reduce energy and water consumption?
Legality Questions
- Have you had an environmental impact assessment done?
- Are you meeting the legal requirements for pollutants and environmental standards in your area?
- Have you had any recent accusations of legal violations?
Conduct Efficient Supplier Audits With Anvyl
Supplier audits are an important part of staying on top of your production process and making sure your finished products meet the highest standards. Your suppliers are key in the process of making your end products, and working with substandard suppliers can significantly damage your own reputation. Taking the time to create an audit process that covers all relevant areas of your suppliers helps you improve your internal audits and supplier relationships.
At Anvyl, we understand the importance of conducting effective and efficient supplier audits. That’s why we work to help you standardize your supply chain management processes and gather important metrics and information about your supplier relationships. To learn more, request a demo of Anvyl to start streamlining your operations today.
