How to Conduct Supplier Audit?

Why Conduct Supplier Audit?

A supplier audit is more than a compliance exercise; it is a proactive approach to safeguarding your organisation’s operations and reputation. The main reasons for conducting supplier audits include:

• Quality assurance: Ensuring products and services meet your standards.

• Compliance: Verifying adherence to legal, regulatory, and contractual obligations.

• Risk management: Identifying potential operational, environmental, and ethical risks.

• Continuous improvement: Encouraging suppliers to enhance their processes and performance.

• Sustainability and ESG: Assessing environmental, social, and governance practices.

Preparing for the Audit

Define Objectives and Scope

Start by clearly defining what you aim to achieve. Are you focusing on quality management systems, health and safety compliance, ethical sourcing, or environmental impact? Determine which processes, locations, and timeframes the audit will cover.

Select the Right Audit Team

Choose auditors who have the appropriate technical knowledge, auditing experience, and impartiality. Depending on the complexity of the audit, you may require a multidisciplinary team with expertise in areas such as quality management, health and safety, environmental compliance, or social responsibility.

Communicate with the Supplier

Notify the supplier well in advance. Share the purpose, scope, and logistics of the audit. This approach builds trust and ensures the supplier can prepare necessary documentation and personnel.

Develop an Audit Plan

Create a detailed audit plan outlining:

• Audit schedule and agenda

• Specific standards or criteria to be assessed

• Key stakeholders to be interviewed

• Documents and records to be reviewed

• Facilities or processes to be observed

Conducting the Audit

Opening Meeting

Begin with an opening meeting to clarify the audit process, reaffirm the scope, and introduce the audit team. This sets a professional tone and ensures alignment with the supplier's management team.

Gather Evidence

Audit activities typically include:

• Documentation review: Policies, procedures, certifications, training records, and performance data.

• Interviews: Conversations with employees and management to understand processes and culture.

• On-site observations: Inspecting production lines, storage areas, and workplace conditions.

• Sampling: Checking a sample of transactions, products, or processes to assess compliance.

Record Findings

Document all observations, both positive and non-conformances. Classify findings by their severity (e.g., major, minor, or opportunities for improvement) and link them to relevant standards.

Reporting and Follow-up

Closing Meeting

At the end of the audit, hold a closing meeting to share your preliminary findings. Be constructive and transparent, allowing the supplier to clarify any misunderstandings.

Prepare the Audit Report

Draft a clear and concise audit report that includes:

• Audit objectives and scope

• Summary of findings

• Detailed observations and non-conformances

• Recommendations for corrective actions

• Agreed timelines for improvements

Monitor Corrective Actions

Effective audits do not end with the report. Follow up on corrective actions to ensure they have been implemented and verified. This may involve re-audits or ongoing monitoring through performance data and supplier self-assessments.

Best Practices for Successful Supplier Audits

• Maintain a collaborative approach to build lasting supplier relationships.

• Use digital audit tools to streamline data collection and reporting.

• Integrate ESG and sustainability criteria alongside traditional quality and compliance checks.

• Treat audits as part of your broader supplier management and continuous improvement strategy.

Conclusion

Conducting supplier audits is essential to ensuring your supply chain is robust, ethical, and compliant. By following a structured approach, fostering open communication, and driving continuous improvement, your organisation can build more resilient and sustainable supplier relationships.

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More information at falcony.io.