In this highly competitive world, businesses are focusing on delivering lower cost products while maintaining the high levels of quality and service that consumers demand. In the manufacturing sector, this means that outsourcing to established and qualified production centers in developing countries has become a key priority for many companies struggling to maintain margins and hold onto customers.
If you are considering outsourcing your manufacturing and servicing or you are already at a very advanced stage, you should prioritize the audit of your suppliers.
Why perform a factory audit?
There are several good reasons to be aware of your outsourcing partners in order to ensure the quality of the finished products and also to satisfy the ethical demands of an increasingly conscious consumer base who do not wish to support environmental damage or child / virtual slavelabour.
You can divide the auditing process into a series of stages, some of which must be continuous and others that can be carried out as “unique” activities.
Initial assessment of the supplier
Before doing business with any other party, it makes sense to verify that they are who they say they are and most crucially that they can faithfully fulfill their promises. Many contacts in the developing world will announce themselves as representatives of a factory, when in reality they are intermediaries. In itself, being an intermediary is not a bad thing, it often allows small factories to reach a broader market than they could do for themselves. The problem for subcontractors is that intermediaries often have no control over the relationship with a producer and cannot solve problems related to quality or performance.
Social compliance audit:
A significant component of the delivery of products to the market in general is to ensure that their suppliers can meet certain ethical and environmental standards. Even large companies with established policies of ethical use have failed to audit their supply chain to comply with these policies, recently the British chain of retailers “Monsoon” was exposed in the national press to use child labour (unknowingly) through one of its Indian factories. Risking your hard earned reputation is not worth it.
Supply chain auditing:
it is not only your direct partners that you must supervise, but you must also make sure that any person who supplies those partners meets certain standards as well. As it is important, you must also make sure that any part or material supplied by this chain is as promised in the initial agreements. There are various manufacturers that have become notorious for replacing the components with lower and lower quality parts or by adding toxic chemicals to materials to increase the production defects (including the local scandal of highly toxic melamine that is added to baby milk, resulting in the death of several children and serious illness in hundreds more).
The samples you received are perfect. Are the products that follow those samples not so good? It is a family history when working with offshore suppliers from developing countries, the quality of construction of the prototypes is almost perfect, but lax standards in production mean that the production simply do not match that quality.
You can save time & money by inspecting a small amount of product during initial fabrication to ensure that at least the initial processes are correct, and also inspect the finished products before they are sent to take corrective action in advance.
For large quantities, it may also be desirable to conduct inspections throughout the execution so that errors that creep into the process can be quickly remedied before they cause large delays in delivery.
You may also want someone to check if rejections are being destroyed according to your contract. For high-value brands, this is an essential element of brand management and, often neglected and confident, Asian markets are filled with rejections of all kinds of important names because of this. Auditing factory compliance in this area can prevent your brand from getting dirty.
Shipment and cargo inspections
It does not end at the factory either, if your products and services are of high value, fragile or have to meet certain legal requirements to pack, load and label, it is a good idea to make sure they do not disappear. Obtain broken or failed inspections upon arrival when auditing goods as they are loaded and until freight.
Large companies may find it economical to place field staff to cover all elements of the factory auditing service, but small and medium enterprises may have difficulty providing the required depth at an affordable price. If you are in this situation, do not skimp on the audit process that could cause withdrawals or more serious damage to your brand and reputation, look for a local partner to work with. Ideally, a partner who specializes in factory audits with local and Western staff, to ensure communication and cultural barriers are not a problem.
Whatever you do, do not compromise quality, your customers will not thank you. You should find a reliable third party inspection company and keep yourself updated with the latest news on Quality Control.