Gone are the days when business organization would only evaluate suppliers at the time of contract execution and would reply on suppliers’ capability for the length of the contract or till such time that complaints from the customers would force them to do so. With the recent globalization and stiffer completion, companies have to remain vigilant and constantly monitor their suppliers for quality, cost and delivery or risk losing valuable clients.
A Supplier Audit is an external audit performed on a supplier by a customer or by a contracted organization on behalf of a customer. It is also referred to as a second-party audit. Second-party audits are subject to the rules of contract law, as they are providing contractual direction from the customer to the supplier. Second-party audits tend to be more formal than first-party audits because audit results could influence the customer’s purchasing decisions.
These audits are an important part of customer-supplier partnership, aiming to check and improve the current quality and delivery processes. Supplier audits can be used as a key element for the yearly supplier evaluation.
Lately, many large business organizations have imposed conditions on their suppliers for ISO 9001 or other certifications (industry specific) to ensure that their suppliers continue to demonstrate compliance and continue supplying parts & components of acceptable quality.
There are several benefits of supplier audits and some are listed as under:
- Ensuring that a functional and efficient Quality Management System (QMS) has been established.
- Transparent documentation of optimization processes assuring the product and raw material quality.
- The development of suppliers can be documented and compared.
- Supplier risks and quality related costs can be reduced.
- An active communication between customers and their suppliers strengthen on the long-term a healthy business relationship.
Supplier audits should garner comprehensive and useful statistics and data for the company. The primary and essential objective is usually to check if the supplier is competent and proficient enough of producing top-notch quality levels on the basis of supplier audit. For the success of the supplier audits in ISO 9001, people must know the requirements of it. The fundamental requirements are as follows:
- Establish the extent and objectives of the supplier audit program.
- Establish the procedures and responsibilities and make sure that resources are given.
- Ensure the execution and implementation of the supplier audit program.
- Make sure that appropriate supplier audit program records are maintained.
- Review, monitor, and enhance the audit program.
These are the fundamental requirements for supplier audits in ISO 9001. So, determining the supplier audit performance not only satisfies the ISO 9001 needs but it also brings some significant benefits for your company. It improves the quality, cost, and delivery in your supply chain.
If the supplier audits are conducted, then your company can witness an increase in compliance, a decrease in costs, shorter delivery time, improvement in quality, and enhanced relationships. These are all practical benefits of efficient supplier audits.