A factory audit is an onsite inspection of work. A factory audit’s purpose is to determine whether a manufacturer can produce a certain order in accordance with your requirements. A factory audit is generally commenced keeping the entire focus on a single product category.
For example, suppose you wanted to sell e-bikes and you have got hold of a company that manufactures electric bikes as well as electric skateboards, then the auditor will focus on assessing the maker’s capabilities to produce the e-bikes you specifically ordered.
During a factory audit in China, the auditor will visit the manufacturing plant. He or she will gather details about the factory and review a list of items that the factory should be able to make. This list is typically based on requirements and international standards that you, the client, have established. Finally, all results are recorded in a report that provides a detailed overview of the manufacturer’s capabilities.
Different sectors have different requirements. For example, medical supplies require abiding by the laws and regulation of the country where it is being imported. Often people have a perception that electronics made in China don’t last for long. At least a factory audit will help in determining if the electronic suppliers are following the guidelines.
Thus, there are several kinds of factory audits, each with a particular focal area, to satisfy those needs. The understanding of a factory’s strengths and weaknesses about requirements is facilitated by doing a factory audit. Understanding the numerous operational shortcomings and resolving any issues right on time can make things a lot easier.
Types of Factory Audit
A manufacturing audit examines whether a supplier can produce and deliver a product that meets your company’s requirements and manufacturing audit requirements. Additionally, it reduces the odds of production issues or costly disruptions that could harm your company. Factory audit in Chinaoffers a variety of benefits that can help your company transfer goods to customers efficiently and swiftly.
Environmental audits evaluate adherence to local laws and regulations for the best environmental protection. It guarantees that your manufacturer complies with several international standards and your company’s compliance requirements.
Ethical/Social Compliance Audit
Today’s businesses should uphold a higher standard of fostering a safe, ethical, and healthy workplace while also implementing fair labour and wage policies. A thorough ethical audit is conducted to determine whether the proper working circumstances are present throughout the organization.
Customs trade partnership against terrorist audits ensures that private companies in your supply chain support a safe working environment against terrorism. A C-TPAT audit will not only increase the security of your supply chain, but it will also guarantee the honesty of your business partners and that their security procedures adhere to legal requirements.
Suppliers are not the only ones who benefit from factory audit in China, but it also benefits the stakeholder. Suppliers prefer to trust their quality assurance department, thus they don’t feel comfortable conducting third-party audits in their organizations. However, external, or third-party audits primarily serve to achieve the following objectives.
- External audits help inspect product quality before, during, and after production which means even if there are minor defects the correction can be made right then instead of returning post-delivery. Moreover, continuous audits will keep manufacturers on alert, and they will avoid making manufacturing errors.
- Allowing third-party audits assures customers that the supplier is
- trustworthy and reliable to do business with. This is because third-party auditors, ( from your company, or sourcing agent) are unbiased with their audits and provide accurate feedback related to the supplier.
- The external audit is frequently more thorough and reliable because an outsider can never overlook any detail and look to correct any potential error to make the company 100% reliable, in contrast to the internal audit team who may take some things for granted without consideration.
- Clients are increasingly placing their orders online and the internet is full of scams, third-party audit reports assure that a factory exists.
- Customers trust those businesses that provide and are available for third-party feedback.
- The reports give the clients an in-depth assessment of the company’s performance in a brief amount of time by providing financial information, sales increases and decreases annually, human resources, and corporate social responsibility. This data helps them make quick decisions.
- The vendor uses audit reports to look at a company’s product line to file bids with the companies that have the products they need. This saves them time and money when placing orders.
- The essential aspects of warehouses, transportation, product handling, packing, storage, and data verification are also covered in the audit reports, so the vendor already knew how and when to send the product to/from the manufacturing plant.
- The vendor can determine how many orders they can fulfil for a company based on its resources and manufacturing capabilities with the help of an audit report.
Benefit of Factory Audit
- A thorough factory audit will make sure the employees are aware of exactly what is expected of them, which helps in increasing production in all areas.
- A proper factory audit with a respected company will ensure that your lines of communication are constantly open and clear. Communication is the main source of a successful business.
- With the help of a thorough factory audit and the checklist that it provides, it’s simple to understand exactly what you have at your disposal and ensure that you’re making decisions that keep you one step ahead of the competition.
- If you don’t know what your factories are doing you may be in a false hope that they will meet the corporate adherence. You can be sure that you have a thorough understanding of how your business is doing by conducting a factory audit.
- The next best thing to keep your manufacturing unit on right track is by factory audit. It establishes a physical presence on your production line and guarantees that any problems are resolved quickly and effectively.
Factory audit in China helps in all scenarios. However, it may be difficult to monitor the Chinese supplier from overseas, unless you don’t have a separate inspection department to handle it. Therefore, many small businesses hire sourcing agents from the same country as that soupier. This helps in auditing the factory whenever possible to inspect the product. Also, a local sourcing agent helps in bridging the gap between language and culture.