4 Key Types of Factory Audits for Your Business
Supplier and factory audits are among the best ways to get a complete and accurate picture of your supplier’s business, policies and facilities, in order to ensure they comply with your operational and ethical standards, and to foster long-term cooperation and improvement.
By conducting factory audits at the start of your cooperation with a new supplier, you can check that they are reliable, capable and ethical—before you give them your business. Following that, it is important to perform regular re-audits to monitor supplier performance, follow up on any corrective action required, and drive improvement in the long term.
Depending on their purpose, factory audits come in a number of types. In this article, we will cover Ethical, Manufacturing, Structural, and Environmental audits, and explain how they can be used for the benefit of your supply chain while also contributing to greater social responsibility and sustainability in global trade.
What are the Most Common Types of Factory Audits?
1. Ethical Audits
Ethical audits help to ensure that your supplier’s manufacturing and other business processes are carried out in an ethical and socially responsible way. This includes safe and decent working conditions, freely chosen employment without coercion, forced labor or other human rights abuses, proper compensation and benefits, compliance with environmental standards for pollution and waste management, and more. Ethical audits can be conducted to a range of international standards (Sedex/SMETA, amfori BSCI, Higgs FSLM, and more), as well as client-specific protocols, especially in the case of brands with established CSR programs.
With increasing consumer and government pressure on businesses to root out unethical and abusive practices from their supply chains, ethical audits provide you with valuable information about the real state of social responsibility in your sourcing network—and with the tools to improve it.
Ethical audits help you to:
Gain an accurate understanding of the state of ethical compliance in your supply chain and establish transparency
Ensure that your products are made under safe and decent working conditions
Gather information from the workers about their working conditions through a worker callback service
Prevent unauthorized subcontracting
Build long-term cooperative relations with suppliers
Improve and maintain your reputation as an ethical brand
Earn greater consumer loyalty
Comply with statutory requirements on human rights and environmental due diligence (e.g., the UK’s Modern Slavery Act, Germany’s Act on Corporate Due Diligence in Supply Chains, the California Transparency in Supply Chains Act, etc.)
2. Manufacturing Audit
A manufacturing factory audit, among other things, lets you know whether your supplier’s actual production capacities match its promises, which is especially crucial when establishing partnership with a new supplier. By visiting the factory in person, auditors give you the real picture of your potential or current supplier’s production lines, equipment, operational procedures, factory management, and more. With such information in hand, you can make an informed decision about whether to initiate or continue business with the given supplier, as well as anticipate and prevent disruptions down the line.
Manufacturing audits help you to:
Verify that your supplier’s production facilities are suitable for manufacturing your products
Align your company’s and your supplier’s sourcing policies
Identify and mitigate potential quality, operational, and ethical risks
Assess the competence of your supplier’s factory management
3. Structural Audits
Many of today’s popular sourcing markets, including Bangladesh, Pakistan and India, have a poor safety track record. Even today, factory fires and collapses remain all too frequent, and continue taking their toll in lives, injuries, and destroyed infrastructure.
Structural audits are designed to analyze the integrity and safety of your suppliers’ buildings and premises. In the scope of a structural audit, licensed civil engineers, electricians and fire safety specialists assess the structural integrity and load conditions of buildings, compliance with relevant codes, electric safety, fire prevention and suppression measures, personnel evacuation routes, and many other aspects of factory safety.
Structural audits help you to:
Ensure safe working conditions to prevent injury and loss of life
Gain an accurate understanding of the state of safety in your supply chain
Ensure that your brand’s products are manufactured without endangering workers
Comply with statutory requirements
Protect your brand image and reputation
Facilitate better and safer working conditions worldwide
4. Environmental Audits
Given the ever-increasing pressure to address climate change and pollution, few companies can afford to be oblivious of their environmental impact. Environmental factory audits are designed to assess your supplier’s environmental management system, waste management, pollution (air, water, soil), energy and water use, and CO2 emissions, among other factors. With this information, you can reliably assess your supply chain’s environmental impact and work with your suppliers to mitigate it. Additional lab services, such as water testing, may also be available to measure the content of specific substances in effluent and emissions.
Environmental audits help you to:
Get a complete picture of your supplier’s environmental performance
Ensure that your suppliers observe international environmental standards (ISO 14001, ZDHC, etc.)
Work with your supplier to mitigate the environmental impact of your supply chain
Comply with local and international regulations for environmental protection
Why Every Business Needs Factory Audits
While each type of factory audit has a specific purpose, their ultimate goal is to drive lasting improvement through global value chains, by helping each business and their suppliers cooperate in more efficient, ethical and sustainable ways.
Third-party factory audits make this possible by providing businesses with accurate information about their supply chains, bringing buyers and suppliers on the same page, and helping all parts of the supply chain cooperate towards proactive, long-term improvement.
For your business, this translates into more efficient processes, lower costs, greater consumer loyalty, better brand image, and hassle-free compliance with government regulations. And even though these are tangible benefits, the full impact of factory audits goes much farther: because every step towards safe and ethical sourcing is your contribution to protecting human rights worldwide and safeguarding the environment.
With this in mind, it’s not hard to see why efficient, safe, and ethical supply chains are a win-win.
How QIMA Can Help
At QIMA, we are committed to bringing trust and safety to trade worldwide. To help you build a secure and ethical supply chain, we offer comprehensive supplier audit programs that give you a complete picture of your supplier’s operation.
Our independent auditors gather data directly at your supplier’s manufacturing facilities, through observation, documents, and direct interviews with the factory management and floor staff. As a result, you receive accurate and up-to-date information about your supplier’s manufacturing capacities, quality management system, structural safety, social compliance and/or environmental impact.
Every QIMA audit report includes a Corrective Action Plan (CAP) with concrete improvement steps for your supplier. Following the initial audit, we offer regular follow-up audits to help you monitor your supplier’s progress and compliance with the CAP, so as to ensure the audit leads to tangible improvement in the long term.
Contact us today to discuss a factory audit program that suits your needs.
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