Why Do Supplier Audits Matter?

As the quality of goods and services from suppliers directly impacts a company’s success, auditing suppliers is essential. Defective products or production delays due to unreliable or low-quality suppliers can severely damage a business’s reputation and performance.

Conducting an audit regularly helps a business reduce vendor risk, protect its brand, and improve supply chain effectiveness. Suppliers that are mandated to meet specific operating standards enhance an organization’s reputation with customers, investors, and regulators because they demonstrate quality and ethical practice by suppliers.

How Does An Audit Work?

Step 1: Set the timeline and framework criteria:

How often, and at what time, should or do supplier audits occur?

Who is responsible for implementing the agreement, an external or internal auditor?

What is the purpose of the audit, and which provider should be next in line for audits?

Would you need access to specific documents, like the supplier website?

Step 2:  Create an audit plan and checklists:

You will need to collect all of the documents that you will need to prepare for an audit.  Specific contracts and other pieces of written direction and agreement might be included. The next step is to create an audit plan, and that plan should include the specific process, audit steps, and key findings of the audit.  You could indicate during this step if you want to evaluate anything about the logistics or health and safety for example. You should note down all of the important questions that you want to interrogate as part of the audit, in the format of an audit checklist .

Step 3: Hold a kick-off meeting:

Schedule a short introductory meeting with the supplier before the audit actually begins.  You can discuss specifics about what will happen during the audit at this meeting.  You should inform the supplier about the audit’s intent and the benefits to both parties’ organizations.  After the introductory meeting, everyone should be well prepared for the audit.

Step 4: Conduct the audit:

Supplier audits are the process of recording an actual state and comparing it to a desired state. To do this, look back at the audit checklist that you created first, and compare the suppliers’ performance against your critical items. You can either notate any observations you made, examine important documents, or question the supplier through surveys in order to get the answers to your questions. Just record everything you are doing and finding, but most importantly, record all deficiencies and non-conformances.

Step 5: Create an audit report:

In a way, the audit report is the inspection certificate.You can maintain all the results of your audit review there and assign a mark to it. It is possible to generate the marking key yourself in theory, but it must always be rational, comprehensible, and consistent because that is the only way to guarantee that you can compare the results.

By taking these actions, companies can successfully lessen the effects of a failed supplier audit, fix any flaws found, and cooperate with suppliers to promote ongoing development and guarantee the supply chain’s long-term success.