Supplier audit: Everything you need to know about criteria and the process

29. July 2024 | Author: Lena Reuter | Reading time: 7 min

A large part of a company is reflected by the quality of its products. To guarantee the quality of their suppliers’ products, companies use the services of external testing companies and their auditors. Ideally, these companies have the necessary industry knowledge and experience and offer independent, thorough product control. Below, you will find out what the supplier audit is, what advantages it provides you and how the process and implementation of an audit are structured.

If you are also interested in a digital solution to manage your audits, take a look at our free e-book!

What is a supplier audit?

Supplier audits show how good your suppliers really are. Suppliers are audited according to existing ISO standards. Industry and sector standards or specific customer standards are also used for supplier evaluation. If desired, the auditing companies develop these standards with you and thus offer a tailor-made supplier evaluation in the supplier audit.

Definition and objectives

Evaluating your suppliers creates transparency about your company’s performance and ensures quality. Suppliers’ uncertainty and risks regarding labour, environmental, and quality standards are minimised. They comply with legal and official regulations as well as internal requirements and assume social responsibility in the supply chain (Corporate Social Responsibility (CSR). Comparing the services of existing and new suppliers also makes supplier selection easier.

Supplier audits also prepare for certifications according to the quality management standard ISO 9001. In principle, companies decide for themselves whether they want to carry out an audit. However, for certification according to the ISO 9001 standard, a certification audit of the suppliers is mandatory.

Types of supplier audits

During product audits, the auditor checks the quality of your suppliers’ products based on specific criteria. With the help of process or process audits, they can check the internal processes. System audits can be used to determine how well the management systems of the supply partners function.

Steps of a supplier audit

Before you can carry out a supplier audit, there are a few considerations and preparatory work to be done. First, it is important to take a closer look at the quality indicators. A key question, for example, is how extensively the supplier audit must cover various topics in the set time. The auditors should have the appropriate qualifications. The question of financing the audits must also be clarified.

Preparation of the supplier audit

You should plan and conduct a supplier audit carefully and then evaluate it thoroughly. These three steps are part of the preparation:

1. Set the date and frequency:
   Determine how often supplier audits should be carried out on your delivery partners.
2. Determine criteria:
   Depending on your requirements and the industry, define binding inspection criteria. Possible criteria for a supplier audit are adherence to deadlines, site conditions, technical equipment, information security, complaint management, employee qualifications, production planning and sustainability.
3. Create audit plan and checklist:
   A checklist and an audit plan help you to keep track of the necessary tasks. In the audit plan, you note the process and the individual audit steps. Your checklist contains an evaluation catalogue with all the questions to be asked. Our tip: Have your supplier audit checklist created using the checklist generator in iManSys.

Conducting the supplier audit

The actual supplier audit is usually preceded by an initial information meeting with the supplier to be evaluated. In this meeting, the audit process is discussed, and the benefits for both sides are clarified.

The supplier is checked based on the defined criteria, and its quality capability is determined. Other measures during the audit may include reviewing relevant documents and interviews. The auditor records the observations and results in the audit report. The report determines the extent to which the supplier meets the desired requirements and awards a grade.

Follow-up to the supplier audit

The last step in the supplier audit process is the follow-up. After the audit, a final meeting with the supplier is held to identify potential for improvement and to discuss further steps. If deficiencies or violations are identified, you can set binding deadlines in this meeting by which your supplier must remedy them. Working with the supplier to create a list of actions they must implement can be helpful. If you identify serious violations, looking for a new supplier may be the better option.

The report may indicate that you must optimise your company’s processes to improve collaboration with your supply partners. In this case, the auditor will monitor the implementation of the specific recommendations and improvement measures.

Legal framework and standards

Companies that outsource parts of their value chain must also ensure the performance of their suppliers. This is best achieved through systematic supplier evaluation. The international quality management standard ISO 9001 evaluates a company’s entire management system and deals with supplier relationships. Therefore, auditing suppliers is a useful qualification for ISO 9001 certification.

Requirements for conducting audits

Whether internal or external, auditors must have specific skills and qualifications to conduct supplier audits. They need appropriate expertise acquired through education, training, or professional experience. They should also understand the company’s applicable standards, regulations, and laws and be able to communicate effectively. Training in the techniques and methods used in audits is also essential.

Relevant legislation and standards

Supplier audits ensure that companies only work with partners who meet their quality standards and industry-specific legal requirements. In this way, companies ensure that suppliers comply with standards such as ISO 9001 or occupational health and safety laws.

Outlook and prospects

Supplier audits are informative for companies and will continue to play a significant role. The reasons for this lie in the increasing quality problems, adherence to deadlines, and issues such as sustainability and environmental friendliness with the products.

Trends and challenges in supplier management

Supplier management is increasingly focused on environmental issues and climate protection. Therefore, it will become more important than ever for smaller companies to check potential delivery partners with a supplier audit before placing an order.

Role of supplier audits in the future

Due to changes in supplier management, a future supplier audit will likely focus even more on traceability, raw material purchasing, manufacturing tolerance, logistics and hygiene.

Digitalisation of the supplier audit process

Supplier audits can involve a great deal of organisational effort and time, depending on the size of the company and the number of suppliers to be audited. Data collection, in particular, takes up a lot of time. The compliance management software iManSys supports you in the preparation, administration, and evaluation of your audits.

Benefits of digitalisation

Integration of iManSys into existing systems

With modern audit management software such as the compliance management software iManSys, you have a powerful partner at your side. The software can be integrated into existing systems and supports you in planning and carrying out your supplier audits. With the checklist generator, you can plan the appointment, create your test plan and prepare the final report after the supplier audit has been completed.

Have we caught your interest? Then discover our software world, “Actions & Obligations”, and find out how you can take quality management in your company to the next level!