Factory Audit and Assessment: Key Safeguards for Supply Chain
How to find an effective way to validate that your vendors are who they say they are? Comprehensive evaluation through factory audits and factory assessment are key safeguards for your supply chain.
Conducting a factory audit before and during your cooperation with a supplier in China, India, Vietnam, or elsewhere in Asia, will not only help to make sure that they are the right partner, but also that they are capable of maintaining the standards that you require over time.
A Supplier Verification Audit with GIS Inspection can help you mitigate supply chain risks and ensure that your suppliers meet the required standards. Our comprehensive assessment includes a background check, legal compliance review, and quality management system evaluation. Schedule your Factory Audit today!
What is Factory Audit?
A Factory Audit is a process of assessing and evaluating a supplier’s operations, processes, quality control systems, legality, compliance with regulations, and overall reliability of a potential or existing supplier. It is typically conducted by a third party inspection company to verify the integrity, quality, and reliability of their suppliers before committing to business contracts or orders.
Approving the factory where production will take place is the last step in the process of selecting a supplier. Conducting Factory Audits allows you to ensure that you are working with legit vendors who can provide a consistent supply of high-quality materials and adhere to internationally recognized standards.
GIS’s auditor qualifies or disqualifies a potential supplier based on manpower, production capability, production and related system, quality control, follow up and suggestions before you start working with them.
GIS Inspection provides Factory Audit inspection services in China, Vietnam, India, and Malaysia.
Why is Factory Audit Important?
A Factory Audit is crucial for businesses that source products from manufacturing facilities, as it provides a comprehensive assessment of the factory's capabilities, practices, and adherence to key standards.
A Factory Audit ensures that the supplier or vendor can design and produce according to normative requirements. It also ensures that a new or existing manufacturer can deliver quality products, undertake continuous improvements and operate efficiently.
The importance of a Factory Audit can be broken down into several key areas:
- Risk Mitigation: A Factory Audit helps identify potential risks, including quality issues, unethical practices, or operational inefficiencies that might affect your business.
- Supplier Validation: It provides confidence that a supplier can meet your production standards, capacity, and compliance requirements.
- Regulatory Compliance: Ensures that the factory adheres to local and international laws, including labor laws, environmental regulations, and health and safety standards.
- Quality Assurance: Verifies that the factory has the necessary systems in place to deliver quality products consistently.
- Cost Control: Helps prevent expensive mistakes by identifying inefficiencies and weaknesses in production processes before they become costly problems.
Factory audits are particularly common in industries like apparel, electronics, food and consumer goods, where companies need to maintain strict control over their supply chains to ensure product quality, safety, and ethical practices.
When Should You Conduct a Factory Audit?
Importers generally choose to conduct supplier assessment as a final step when qualifying new suppliers.
When going through the sourcing process, you likely identify several suppliers that can manufacture your product. Then, after evaluating them in various ways and getting product samples, you narrow them down to one.
That supplier may seem to meet your production, quality, and delivery requirements on paper. They may offer reasonable pricing and produce superb samples — but before you sign on the dotted line, you can conduct a supplier assessment to be sure they’re not misleading you.
Employing a third party inspection company (like GIS Inspection) to provide factory audit services will help you assess their capabilities and capacity. With the information you collection, you’ll have the confidence to determine whether to place an order.
Buyers also perform factory audit as part of your ongoing supplier quality management.
As your relationship with a supplier progresses, it’s best to ensure they maintain their capabilities and can continue meeting your expectations. You can audit them at a predetermined frequency — for example, every two years — to ensure they still meet your standards.
What is the Factory Audit Checklist?
When conducting factory audits, a comprehensive checklist is critical for ensuring that your quality management systemis followed correctly. GIS conducts a factory assessment as the following checklists:
1. general Information.
2. production and related system
3. quality control
Click here to check a sample report
1. General Information
We check the manpower, production capability, main countries or areas to export per year, production area, technical capability of product’s development, and Audited or certificated by second or third party.
We gather some basic information that is usually sufficient to confirm whether a company is likely to be a manufacturer (rather than an intermediary), what product types they are authorized to work on, and who the owner(s) are and to verify what they said is true.
2. production and related system
Following checklists of production and related system are performed to identify whether the supplier has an effective quality management system:
l Layout of the factory /workshop/warehouse
l Resources
l Workshops
l Production Plan
l Purchase of production material
l Subcontract
l Production equipment
l Operating instructions
l Operators
l Process control
l Identification and trace of product
l Main working process
l Packing
l Handling
l Storage
3. Quality Control
To ensure that the quality of products meets your expectations, quality control and quality assurance are carried out by:
- Receiving inspection
- In-process inspection
- Final inspection
- Inspection equipment
- Quality control person and inspector
- Management of sample
- Quality record and report
- Control of nonconforming product
- Quality analysis and Corrective action
- Rate of non-conformity
How does GIS Conduct Factory Audit?
The process of a Factory Audit includes: opening meeting, on-site assessment, document review, close meeting, and report writing. Auditor visits the factory at a certain time as agreed.
1. Opening Meeting
Ask the relative people including HR, production manager, and quality manager come and have the opening meeting. The content of the opening meeting is as follows:
- Explain the purpose of assessment.
- The scope of the assessment area, and the requested documents.
- The photo request of audit area and documents, and any other support.
2. On-site Assessment
l Check the factory whole scan, factory gate, buildings, office, showroom, and take photos.
l Visit material warehouse and accessories warehouse, and take photos. Check the materials storage material identification such as IQC records and labels. Check if the material stored in a reasonable way.
l Check the semi-products and final products area. It is the same story as the checking in the material warehouse.
3. Documents Review
Ask factory to provide the relative legal documents such as business license, Imp & Exp license, production license, etc., and make sure it is the requested assessment factory.
4. Closing Meeting
Explain to the factory representatives the findings during the audit, and ask factory if any feed backs or explanations.
5. Report Writing
Write report based on the their observations as well as their subjective evaluations. Follow up and suggestions also be remarked on the factory audit report.
How much does Factory Audit Cost?
We charge 200 USD per man-day in major areas of China (and extra travel expenses apply in other places).
We charge 299 USD per man-day in Vietnam, India, and Malaysia.
Ready to get started on finding your new supplier?
Click here to get a quote on Factory Audit
GIS Factory Audit Service
GIS Inspection is a leading third-party quality assurance agency in China. We have nearly 20 years of experience within quality control industry. Factory Audit service by GIS Inspection is a cost- and time-efficient way to prepare a complete profile of your potential supplier, ensuring they become a dependable component of your global supply chain.
Get in touch with us to learn more about our factory audit service and find the factory audit solutions.
