What is a factory audit or supplier inspection service ?
In China, a Supplier Inspection Service is also called a Factory Audit Service sometimes, it is a kind of detailed company verification services and it is a standardized process used by quality managers or auditors to determine if a supplier or vendor conforms with the required business standards in delivering high quality products and services.
Generally speaking a full factory audit report may cover following parts:
1.Supplier Details
This is the basic part of the audit report, it will tell you all the basic information about the supplier, covering their full company name, address, staff, facilities, boss, management level, bank account and tax ID etc.
2.Qualification Audit
This audit is mainly to check out their Export License and other specific certification required. In China, not all the factories have the right to export because they do not have their own export license and every exporter must get an export license from the government first before selling to overseas market, this is why sometimes some factories have to work with a professional export agents in China as they cannot sell to their customers directly. Another important thing is that for some special products, the customers may ask for more qualifications in order to import smoothly, say, ISCC certificate for UCO and biodisel industry in Europe, FDA certificate for medical products in US, HALAL certificate for food products in Middle East etc. Other certificates like UL, CE, FCC etc are also very important for some specific products and areas during international business.
3.Capability Audit
A capability audit, also called a capability assessment, is an on-site visit to your supplier's (or potential supplier's) facility. This audit is mainly to check out their production capacity, overall company management
system and facilities etc to make sure they can fully meet your sourcing requirements in China.
4.Quality Audits
A quality audit, also called a quality assessment, is an on-site visit to a supplier's facility. At that facility, auditors go through a series of checks to help you evaluate the effectiveness of their Quality Management System (QMS). The auditor will measure the effectiveness of the factory's Quality Management Systems (QMS).They'll evaluate them based on the ISO 9001 standard. And you'll come out with a much clearer picture of whether or not there are any quality risks to your supply chain.
5.Social Compliance Audits
A social compliance audit is to verify whether your suppliers or partners are in compliance with universally held norms and local laws related to social responsibility. These audits play an important role in helping to ensure an ethical supply chain. The auditors will verify the working conditions in the factory and to see if they meet defined criteria in the following areas:
Child Labor
Forced and Compulsory Labor
Health and Safety
Freedom of Association and Right to Collective Bargaining
Discrimination
Disciplinary Practices
Working Hours
Remuneration
Management System
Social compliance audits are generally based on the SA8000 system (SOCIAL ACCOUNTABILITY), which measures social performance in areas that are important to your corporate social accountability.
6.Environmental Audit
An environmental audit is to assess their environmental management system. The audit report will give you a
clear picture of their practices and helps you determine whether they are an environmentally responsible supplier or not.These audits are generally conducted based on the ISO 14001 family of standards, which are focused on verifying that the supplier has systems to“identify, manage, monitor and control their environmental issues in a holistic manner.” The key focus areas for these assessments tend to be the following:
Air pollution
Water and sewage issues
Waste management
Soil contamination
Climate change mitigation
Efficient use of resources
The assessments are designed for companies that want to develop and maintain a supply chain that is free of problematic environmental issues. Audit criteria are flexible and can be modified to suit the needs of your organization.
7. Security Audits
The Customs-Trade Partnership Against Terrorism (C-TPAT) is an initiative of U.S. Customs and Border Protection (CBP). Its goal is to improve the security of private companies' supply chains with respect to terrorism. Our auditors assess the security and processes of your suppliers on-site to ensure compliance.
A supplier is evaluated in accordance with C-TPAT standards. These audits generally include the following:
Assessing their physical access controls, including employee access controls, visitor access controls, delivery controls, and procedures for removal of unauthorized persons.
Reviewing their physical security, including fences, gates, parking, building structure, locking devices, alarm systems, and video surveillance.
Assessing their procedural security, including documentation processing, manifesting procedures, shipping & receiving, and cargo discrepancies.
Other items in accordance with C-TPAT requirements.While on the ground at the supplier's facility, our experienced auditors will gather all the information required to determine whether a supplier will meet C-TPAT standards.
Different clients may have slightly different requirements on auditing their suppliers in China.Say, for some Asian clients, they may focus on the Qualification Audit while for some European clients, they ask for Security and Environmental Audits as well. The cost is quite different based on the different audit requirements from the clients worldwide.
Why do you need a factory audit?
You can't always trust everything your factory says. They can talk big and make bold claims about their facilities, equipment, production capacity, and internal quality control procedures in order to win your business. I remember a case five years ago, a South Africa customer was cheated by a supplier in Tianjin who claimed to be a big manufacturer. The customer lost more than 50000 USD due to the quality issue, when he came to China for a solution, the customer inspected their address and found that they are only a smallest trade company in China. Please keep in mind that according to our experience more than 80% of the Chinese trade companies or agents you meet online or at local trade fairs would like to disguise themselves as a real factory in order to obtain big orders. Some professional scammers use 'fake' export licenses or business licenses to attract foreign clients.Seeing is believing, the best way to check them out is simply to go and inspect them in person with your eyes. Factory (Supplier) Inspection or Auditing Service is so far the best way to find out a long term business partner or a qualified factory in China, esp for OEM services.
How to select a right factory auditing service company in China ?
There are tens of hundreds of inspection service companies here in China. How to select a right auditing service partner in China ? Here are my tips:
If you are from a top brand and if you are rich enough, you can simply work with the well-known inspection service brands like SGS, BV, ITS etc. They all have branches in China and they offer professional auditing services as well. Here are their official websites:
CCIC: www.ccic.com
ITS --- www.intertek.com
SGS -- www.sgs.com
BV -- https://group.bureauveritas.com
TUV -- www.tuv.com
UL -- https://china.ul.com/
ALGI -- www.algi.net
If you from a small-mid company and if you'd like to save more time and cost, you can work with a local inspection service company in China. When you search a factory audit service online, you will find out hundreds of factory auditing service providers in China. Here are my suggestion in selecting a right auditing service partner:
1.Qualifications
Ask them for their business license and check out their basic qualifications in China, say, business scope.
2.Service quality
Ask them for their client information, call their current clients for reference to check their service quality.
3.Quotation
Ask at least three service companies for quotation, do not choose the highest one or the cheapest one, you can choose the middle one as there is a Chinese saying like‘no good product or service is cheap’.
4.Location
Choose a right service company who is nearer to your supplier in order to save more travel cost and time.
You can easily choose a right partner after checking out above three aspects. STIN is also offering supplier inspection and auditing service in China, please check: www.chinabizservices.com
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