Factory inspection is to audit or evaluate the factory according to certain standards. It is generally divided into human rights factory inspection, quality factory inspection, anti-terrorism factory inspection, etc. The audit process is similar, generally including initiating application, formulating audit system, confirming audit, paying fees, scheduling audit, implementing audit and delivering audit results.
Definition Of Factory Audit
– Customer: Refers to the final buyer or brand party
– Middleman: It can be understood as a trader who purchases products from factories and resells them to customers.
– Factory: Refers to the enterprise that produces goods, also known as “supplier”.
– Audit company / Institution: The professional institution that performs the audit. The common ones are TUV.
1. Initiate application
For the brand side, factory inspection is to strengthen supply chain management, ensure stable product quality, avoid risks such as public opinion and product recall, screen new high-quality suppliers, improve the quality control level of existing suppliers, and support the company’s business strategy decision. Therefore, the factory audit is generally initiated by the customer, or the middleman applies to the customer for factory inspection when applying for the addition of a new factory.
As Party B, in order to meet the needs of customers and obtain orders to accept factory inspection, the factory is often like a passive party. In fact, it is not the case. We can take factory inspection as an opportunity to improve the management level of the factory. In addition, if an enterprise wants to show its strength, gain customer trust and settle in some e-commerce platforms, it also needs to actively find a third party to do factory inspection. This kind of factory inspection can be done as a demonstration type. The enterprise wants to show what the audit institution has tested, which is similar to enterprise qualification verification, rather than evaluation and scoring.
2. Develop audit system
According to the audit standard, the factory can also be divided into standard factory or two party customized laboratory.
Standards, such as ISO series, have a set of unified audit checklist. No matter what organization audits, they all use the same set of standards. Of course, they are all ISO certificates. However, due to the qualifications of auditors and industry reputation of different organizations, the gold content is naturally different. It is suggested that we should not choose small organizations for the sake of greed. Instead, it is easy to lose more than gain.
In case of customized two-party audit, the entrusting party informs the audit institution of its own requirements and demand points, and the institution formulates the checklist, auditor’s instruction manual, etc. suitable for the entrusting party according to the customer’s requirements and audit system standards, laws and regulations, as well as the factory inspection reports required by Wal Mart, Disney, Decathlon and other brands when they settle in the e-commerce platform And the factory inspection required by the customer are subject to two-party audit.
3. Confirmation and review
The client agrees to audit and appoint an audit agency.
4. Payment
The customer or the factory shall pay relevant expenses (such as audit fees and travel expenses) to the audit organization. Whether the expenses shall be paid by the factory or the customer shall be subject to the specific negotiation between both parties.
5. Audit schedule
After receiving the audit fee, the audit institution will contact the factory to collect the pre audit questionnaire and make an appointment for the audit date. Inform the appointment details by e-mail, including auditors, arrangement of audit date, factory name, site address, audit list / plan, etc.
6. Implementation audit
On the appointed audit date or audit notice period, the auditors of the audit institution shall go to the site of the audited factory to carry out the audit.
Factory Audit Process
1. First meeting: After arriving at the site, the auditor will convene the enterprise representatives to hold the first meeting, briefly introduce the audit purpose, schedule, employee interview requirements, and answer the questions of the factory representatives.
2. Site inspection: In case of QMS audit, the auditor will carry out a series of inspections on the on-site fire-fighting facilities, maintenance of machinery and equipment, production quality control, raw materials and storage; If it is a CRS audit, it focuses on social responsibility, human rights, child labor, occupational health, wages and working hours, etc.
3. Document check: The auditor shall check the factory documents as required, mainly including process flow, production records, warehouse entry and exit records, inspection records, employees’ wages and working hours records, employee information, etc.
4. Employee interview: Not all factory inspection projects require employee interview. If yes, the employee interview is conducted independently, and the manufacturer’s representative shall not intervene.
5. Final meeting: The auditor shall issue a temporary audit report to summarize the existing problems and areas that need to be improved.
6. Delivery of audit result: The auditor will issue a report. After the review, the entrusting party will receive a complete factory inspection report.
7. Rectification: According to the severity of the missing points in the audit report, the customer requires the factory to make a corrective and preventive action report, which may need to be audited again, depending on the severity of the problem and the requirements of the client. If the audit result is qualified, the annual audit is generally arranged after 12 months.