First, let’s look at your costs of poor quality
- Market opportunities lost because of poor past quality — a lost customer can be a very heavy loss, dwarfing all the costs showing on your P&L statement
- Cost of dealing with problems — sometimes the cost of throwing away an entire production batch, and paying penalties/chargebacks from customers
- Keeping an army of inspectors to constantly monitor quality... because production comes out of inconsistent systems & processes
Now, how does a supplier auditing program help reduce these costs?
- Equipment keeps breaking down? No, becoming better at repairing is not going to help much. You need preventive, and maybe also predictive, maintenance.
- There are constant production stoppages because of supplier quality issues? No, tightening incoming QC is not the long-term solution. You need to work with better component suppliers.
- Production operators keep ‘forgetting’ something important? No, firing them won’t help. You need to set up a training program, clear work instructions, visual aids, etc.
In simple terms: from better processes will come better products. You will need fewer inspectors. You will suffer fewer quality issues. You will lose fewer customers.
Does auditing really help drive factories in the right direction?
- You don’t want to invoke “this is for compliance”, review evidence that might well be fake, and threaten to stop the entire business relationship on the basis of one assessment. That’s typical of social compliance audits, and I have zero empathy for those.
- You don’t want to send a junior auditor who sits in a conference room and simply “ticks boxes”. ‘Do you have XYZ, yes or no?’ Is a joke. Suppliers will prepare some paperwork, and will do nothing to improve their operations.
So, what does good factory auditing look like?
Look at processes from a ‘system thinking’ perspective
Follow a logical approach
Challenge manufacturing managers, process engineers, purchasing managers, etc.
Do not tell them what they should do
Look at past issues and follow up
Don’t get bogged down in a lot of paperwork
What's the next step?
If you're ready to begin auditing a supplier's factory (or perhaps your own), you should now read: 7 Tips To Start a Quality Auditing Program to Cuts Your Risks - in this post we'll explore a proven auditing process that is made to reduce quality risks now and in the future.