How to Audit a Supplier

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Quality suppliers are a necessary part of an organization because they provide good and services that you use to serve your customers. The business practices of suppliers have a direct impact on your organization. If you have a supplier that is not able to deliver your products on time, that directly affects your revenue. Auditing a supplier is a necessary part of a quality management system. You may decide to audit a new supplier because you are considering using them for your business needs, or you may decide to audit a current supplier because of an incident that occurred in the past.

  • Contact your supplier to schedule a time to conduct the audit. Pay attention to the response of your supplier, especially whether or not they are receptive to you performing an audit. Take you supplier's time into consideration and try to schedule an audit time that benefits both parties.

  • Develop your audit plan and review the quality history of your supplier. Your audit plan is determined by your reason for performing the audit. For example, if you've experienced some production issues with your supplier, then you should spend more time auditing the production area.

  • Arrive to your supplier's facility on time. It is important to keep your supplier's time schedule in consideration. If at all possible, try to avoid rescheduling your audit because it makes your company appear unprofessional.

  • Pay attention to the parking lot, the dumpster area and the front office area to see if they are neat. Take notice if you are greeted in a professional and courteous way. All of these things are a reflection of the principles of the supplier's management team.

  • Take a tour of the facilities. Look for any equipment defects or safety issues. Inquire about how many temporary workers and how many staff employees work at the facilities. Audit the supplier's shipping policies, and observe the production and assembly processes. Document the manager's attitude while you are touring the facilities and performing your audit.

  • Look at an existing supplier's invoices and pricing contracts to ensure that the supplier is charging you accurately. Look for any discrepancies in pricing, such as inaccurate charges and pricing changes made before the scheduled time. Collaborate with your accounts payable department to search for any inconsistencies in supplier invoices, including unexplained miscellaneous charges and inaccurate shipping and transportation fees.

  • Verify the business terms of a new supplier. After a couple of months of using a new supplier, you should review a sample batch of the supplier's invoices line by line and the business contracts to see if the terms match. If you find a discrepancy proving that you were overcharged, you should contact the supplier to request a refund.

  • Take good notes of the things you are observing. This will aid you when it is time to write your evaluation and present it to management. Add as much detail as necessary to your notes so that you are able to effectively address any issues.

  • Write your evaluation. Include in your evaluation any recommendations and support them with evidence. For example, if you are recommended new equipment, document the defective equipment you noticed while performing your audit. Provide the supplier with the evaluation and discuss any concerns your supplier has.

Tips & Warnings

  • Try to make the supplier feel as comfortable as possible.
  • Never surprise a supplier with a visit to perform an audit. It will not yield positive results.

References

  • Photo Credit Comstock/Comstock/Getty Images
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