WHAT IS A SUPPLIER AUDIT AND WHY DO YOU NEED ONE

Customers are becoming more mindful of product quality and the story behind how a product is made.

A long-term supplier is like an extension of your business. So, they need to reflect your brand. That includes fair working practices, high-quality standards, and a capability to ramp up production as required.

Yet online sellers often rely on overseas suppliers for various product types and cost-effective pricing. And they are looking for the best quality products in a timely manner.

But managing suppliers is not easy. Here's how a supplier audit helps you find the right business partner to support your sales.

The Challenges of Managing Suppliers in a Global Economy

A global economy may have expanded opportunities. However, it has also created new challenges for businesses. If you are an importer, it's very likely that your suppliers are not local to you. That distance means you have less control over the product quality that leaves the factories and the warehouses.

You might only get the chance to see one product sample after you decide to place an order with the distanced manufacturer. In some situations, such as the dropshipping model when selling online, you might not even see your products before they land at the front door of your customer's homes.

So, you face the risks of quality issues or late shipments, which leads to the biggest problem for businesses: unhappy customers and bad reviews.

Hence, managing the overseas suppliers properly to ensure product quality is a must for importers and online sellers. That's where a supplier audit comes in.

What Is a Supplier Audit?

A supplier audit is an organized evaluation of your suppliers, checking that the factory and what they produce are up to your standards. It's an assessment of the supplier's usage of industry regulation practices and the quality management system. That might include checks against the contract, the facility, the personnel, and product quality. It may also cover regulatory, legal, and ethical issues.

Depending on different supplier types, the audit focus will differ.

A third party like eAQF is generally responsible for conducting such audit on your behalf. They'll use a pre-defined comprehensive checklist to ensure the checks are inclusive and fully aligned with your needs.

Ultimately, audits are there to give you peace of mind. It's like having eyes and ears on the ground when you can't be physically present on-site.

The Benefits of Using Supplier Audits

There are many advantages to having a supplier audit. Here are the main benefits you should know about.

It Helps To Gain Control On Your Supplier

Cooperating across the ocean, you want to know the actual working practices to ensure the business operation is legit and aligns with your expectations.

Any incompliances could lead to product defects, bad customer experiences, and even worse problems that harm brand reputation. You might have seen this before when major brands have faced accusations of child labor, for instance.

Supplier audits help prevent such reputational crises from your business. It will help to gain control over your suppliers to evaluate the day-to-day productions and give you the chance to identify risks before they arise.

It's Comprehensive

Supplier audits aren't a simple checklist. These audits look at the small details that can make a massive difference to the success of a business.

From the overall management structure to the smallest production facility, from local rules to international regulations, supplier audits offer a thorough assessment of the aspects that concern your business.

Besides the insights. audits also look for areas of improvement or potential risks to your business. It's a comprehensive way of identifying and preventing future issues that could cost your business money.

Supplier audits help you put continuous improvement at the heart of your quality procedures.

It Improves Your Online Reputation

Quality control goes hand in hand with your business reputation. Supplier quality is also an important factor in overall quality control. Any scandal, like forced labor, child labor, or factory safety accident, can destroy your business. That's vital in an era where online reviews can make or break an emerging business. You must ensure your customers that the suppliers you work with are compliance and products you sell them are made legit. This is crucial to long-term success.

Supplier Audits: The Four Types

In this section, we'll cover the four main types you should know: the Supplier Qualification Audit, Social Audit, Extensive Factory Audit, and Environmental Audit.

Supplier Qualification Audit (SQA)

A supplier qualification audit - also known as an SQA, is one of the four types available from eAQF.

The audit focuses on checking the supplier's documentation & certification, in-house operations, and production facilities. That will begin with a look at the supplier’s legal document to prove the authentication. Also, it will cover the production setup, ensuring it can deliver the products you need.

The auditor will also examine the facilities, ensuring they are the right machines and suitable for the type of product you order.

Part of the audit also examines management capability. It helps to ensure that you have experienced personnel overseeing your production.

The same checks will happen for machinery and processes. You'll need to ensure every aspect of your supplier's setup has the capability and competence you need.

Social Audit (SA)

The Social Audit checks that your supply meets all your ethical standards. This audit will cover aspects including workers' rights and workplace safety. It is there to protect your brand reputation.

Social responsibility in this era means more than a few ticks in a box. Customers demand it, and the law - in many cases - requires it. Customers not only care about the product quality but also how their products are made.

A social audit gives you a valuable chance to overwatch whether the suppliers you work with are compliant or not. It helps to avoid associating your business with terms like "sweatshop" and "child labor".

It's vital to publicly back up any statements you make about social responsibility with evidence. A social audit gives you that backing.

Plus, if there are problems, you can resolve them with the supplier before you begin selling goods. Alternatively, it allows you to walk away if the situation isn't to your satisfaction.

Extensive Factory Audit (EFA)

You might see an Extensive Factory Audit referred to as an EFA. It's one of the most comprehensive quality checks you can choose when working with a manufacturing supplier.

You can use it in one or two ways.

You can carry out an EFA before finalizing an agreement with a new supplier. Or you can use it to run checks for an existing supplier to monitor their performance. You can use this audit to check that your new supplier is capable of fulfilling the orders you place, or check the regular supplier upholds the standards set up before.

The EFA will detail what criteria are met and what are not. It helps identify potential production risks and if they struggle to meet a delivery.

The EFA report is a way to build confidence in the quality of your product and the reliability of your supply chain. By re-running the audit regularly, you ensure your supply chain keeps to those high standards.

Environmental Audit (EA)

Another important audit type is Environmental Audit, also called as EA. As the name suggests, this audit ensures a supplier meet required environmental regulations and your business's sustainability standards.

Nowadays, more customers care about the sustainable practices behind the products on the shelf. Many customers will choose to purchase from a brand that applies sustainable operations or uses sustainable materials.

With an EA, you can check if the supplier meets required local environmental laws and environmental regulations in your destination market. Failing to miss those rules can lead to fines and loss of customer trust.

The EFA gives you sound evidence to support your sustainable claims and compete with your competitors.

How to Arrange a Supplier Audit

You now know about the benefits of supplier audits and the different types available. But what about the process of running a supplier audit? Here is how that usually works.

Deciding What You Need

Your first step is to establish what you need. What you require will depend on what stage you're at with your supplier relationship. Here are a few questions you might ask yourself:

• Are you evaluating several potential suppliers as part of your selection process?
• Have you selected a supplier and need to run a quality check?
• Do you want to check the capability of a potential supplier?
• Do you require confirmation your supplier is abiding by environmental laws?
• Do you need reassurance that your supply chain is free of child labor, poor working practices, or other ethical concerns?

You'll also want to consider other factors the timescales during this stage. Timescales will often be more pressing if you are sourcing a supplier for a new product launch.

Choose a Provider

Once you know the type of audit you need, it's time to choose a provider.

Look for experience in the industry. For example, at eAQF, we have over 15 years of relevant background in quality audits, so you know you're in safe hands.

You'll also use this stage to check if the audit company can deliver in a timely manner.

Prompt service is a must, as delays in a quality audit could have a detrimental impact on your business operations and product launch dates.

Book the Audit You Need

Once you have confirmed the audit you need and decided the partner to work with, you can place your audit order.

Partnering with eAQF, you can place your audit order online anywhere anytime with some simple steps: tell us the contact information of your supplier and factory, select the preferred audit date, let us know if you have other special requirements, and pay online. eAQF's trained auditors will visit your factory on your behalf and a detailed audit report will be sent to you for your review.

Post-Audit Review

Once the audit team completes an audit, you will need to allow yourself time to review the report. This record will outline findings so you can know the actual performance of your overseas suppliers. The best situation is your supplier meets your standards and legal requirements to carry out the production. If not, you will need to work with your supplier to make necessary improvements to their quality procedures and before moving to the next steps.

Supplier Audit: Your Next Steps

Customers care about quality and about the origins of what they buy. Managing quality throughout your supply chain is vital for your business reputation, operations, and product development.

A supplier audit is the solution. It's there to protect your business and give you peace of mind.

Working with eAQF can make your life easier. With eAQF, you can book and manage quality control solutions easily online, receive and review your quality reports immediately once they are ready, and access real-time data 24/7. Are you ready to improve your e-commerce business with effective quality control? Register for eAQF today and enhance the collaboration between you and your suppliers!