How do you balance the frequency and scope of supplier quality audits with your resources and risks?

1 Determine your audit objectives

Before you start auditing your suppliers, you need to define your audit objectives and criteria. What are the main goals and outcomes of your audits? What are the key performance indicators (KPIs) and requirements that you want to measure and verify? How do you align your audit objectives with your business strategy and customer expectations? Your audit objectives should be clear, specific, measurable, achievable, relevant, and time-bound (SMART).

2 Assess your supplier risk profile

In order to prioritize and allocate your audit resources, you need to assess the risk profile of your suppliers based on factors such as their importance and value to your business, the frequency and volume of their deliveries or transactions, the type and severity of potential risks associated with their activities, their performance history and feedback, their certification status and audit results from external parties, and their location and exposure to environmental, social, or political factors. Not all suppliers pose the same level of risk to your business; some may have more impact on product quality, safety, or reputation than others, or have more complex or critical processes, products, or services. Additionally, some may have more history of non-conformities, complaints, or incidents than others.

3 Define your audit frequency and scope

When determining your audit frequency and scope for each supplier or supplier category, you should consider your audit objectives and the risk profile of the supplier. Generally, if a supplier has a high impact or risk on your business, a low performance or compliance level, a significant change or improvement in their processes, products, or services, or a new or emerging issue or opportunity, you should audit them more frequently and extensively. Additionally, you should factor in your available resources, such as time, budget, staff, and tools, when defining your audit frequency and scope. If necessary, you may need to adjust your audit plan depending on your resource constraints or availability.

4 Choose your audit method and format

When conducting supplier quality audits, there are various methods and formats to consider. On-site audits involve visiting the supplier's premises and observing their operations, facilities, documents, and records; however, they tend to be expensive and disruptive. Remote audits use technology such as video conferencing or online platforms to communicate with the supplier and review their evidence remotely, making them more convenient and cost-effective. Self-assessment audits involve asking the supplier to complete a questionnaire or checklist and provide supporting documents or records; yet, they may have issues with accuracy, completeness, or honesty. Ultimately, you should select the most suitable audit method and format for each supplier or supplier category based on your audit objectives, supplier risk profile, audit frequency and scope, and available resources.

5 Prepare your audit plan and checklist

To prepare for an audit, you need to create an audit plan and checklist. Your audit plan should include the purpose and scope, criteria and standards, team and roles, schedule and duration, agenda and activities, as well as deliverables and expectations. Meanwhile, your audit checklist should list the questions and items you want to check and verify during the audit, such as the supplier's quality policy and objectives, system and procedures, records and documents, performance and improvement, risks and opportunities, as well as feedback and complaints. Your audit plan and checklist should be tailored to each supplier or supplier category based on your audit objectives and criteria.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?