Quality Audits Help to Reduce Supplier Chain Risks

As a buyer, you’re likely under pressure to find the best price for goods without sacrificing quality. And understanding a supplier’s capabilities before working with them is key to this objective.

Many experienced buyers choose to rely on a dependable third-party QC partner as their “feet on the street” for supplier evaluations. These partners can perform a quality audit on your behalf and provide detailed results, including production capabilities and potential quality issues.

Here are a few risks an audit can help you avoid before you place an order with a supplier: 

Production and shipping delays due to disorganization

All buyers worry about delivery dates. A bargain price or high product quality may be little consolation to customers that don’t receive their good on time.

Shipment delays threaten your reputation as a reliable supplier. A late delivery can cause a customer to end their business relationship with you or consider alternative vendors. To make matters worse, you might not receive full payment for an order if your customer charges back for late delivery.

Even if your supplier is responsible for a delay, your end customer is still likely to blame you for a missed delivery date.

Quality issues due to limited factory QC checks

Quality issues pose a different level of risk, depending on your product type and the defect severity. While some mishaps are inevitable as you iron out the production process, you never want to let quality issues through to your customers.

This is especially true for purchasers who sell on platforms like Amazon. Just one defective shipment can result in a suspended Amazon seller account.

Some questions an auditor might ask during a supplier audit to verify internal QC processes include:

a.   Does the factory conduct incoming inspection according to defined standards and requirements? Are the results of incoming inspections recorded?

b.   Is the status of raw materials clearly identified after being inspected (e.g. “approved”, “rejected”, “pending”, etc.)? Is rejected material recorded and quarantined?

c.    Do personnel responsible for product quality have the authority to stop production to correct quality problems?

d.   Does the factory conduct pre-shipment inspection and testing based on the defined inspection requirements? Are the results of inspection and testing recorded?

Conclusion

Quality audits are an effective tool purchaser can us to evaluate new suppliers and manage supplier risk. They can also be a tool for continuous improvement, since you can use audit results to benchmark established suppliers and compare them to others. Together, these offer a robust analysis of supplier risks and help you determine the best fit for your supply chain.