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Types of Factory Audit and their Benefits in Import/Export

factory audit

Factory Audit is one quality control mechanism that gives the importer a sense of trust for the vendor or supplier he is working with. The core reason behind conducting a factory audit is to ensure that the manufacturing unit and the manufacturer can be trusted with the extensive supplies and the products’ quality and safety.

Supply chains are diversifying, and importers/exporters are going global with their businesses. In such a scenario, dealing with suppliers on-site and examining the site for capacity, quality, and safety alone is a considerable challenge. With the ever-increasing global network of importers/exporters community, there is a significant increase in fraudulent suppliers and companies that tend to cheat their clients on prospects of quality, stability, and many times even identity of the company.

A factory audit is usually conducted after an importer has decided on his supplier. The audit as a quality control process examines aspects like- the capacity of a production house and if it has enough potential to take up a big project, the supply chain functions, the resources and employees working in the plant, and the quality management systems set up in the plant. These areas are widely analysed and investigated during the entire factory audit, and the results are noted in a definitive and comprehensive factory audit report.

There are two significant situations when a retailer/importer/buyer decides to conduct a factory audit- as a final step to finalize the selected supplier or as part of supplier quality management. It is equally essential to understand the processes and the production line in-between manufacturing to ensure the quality and safety of the final products.

Productivity, quality control, and regulatory compliance are three critical areas of a factory audit target. The product deliveries should be on time, the products must comply with the set regulations, and strict monitoring of the production line for improvements must be on the agenda for the supplier you work with.

Types of Factory Audit

The more diverse the import/export business is, the more diversified factory audit an importer might require. With different importers/retailers, the need and requirements for a factory audit change. Let us look at various types of factory audits that happen on various levels and for distinct reasons-

Social Compliance Audit, Social Compliance audit keeps businesses, companies, factories, and brands in line with their social responsibilities. Understanding local, national, and international labour laws and their implementation within the system is an essential parameter in this type of factory audit. The social compliance audit is meant to position a company in the right mind to ensure they run their businesses on moral and ethical grounds.

Also known as an ethical audit, social compliance audit follows a definitive checklist that examines the critical aspects of moral obligations within the organizational hierarchy.

  1. Child labour is prohibited.
  2. Forced labour in the name of night shifts or extra hours is a red flag.
  3. Discrimination of race, origin, caste, gender, etc., is strictly prohibited.
  4. The health and safety of employees should be the priority.
  5. Working hours should be at most 48 hours per week.
  • Environmental Safety Audit

Businesses, companies, plants, and brands must ensure that their systems and processes are always in sync with the environment and don’t harm it in any possible manner. An environmental audit systematically scrutinizes a company’s culture and processes to determine if proper quality systems are established to tackle environment-related issues. Areas like environmental policies, energy consumption rates, waste management systems, pollution control mechanisms, recycling processes, etc., need to be handled.

When considering having an environmental audit, one must have a clear understanding as to why they require the need for it. In this way, it is easier to know the type of audit to go with. Majorly, there are three kinds of environmental audits to consider-

  1. Environmental Compliance Audit – This audit explicitly examines a company’s functional and operational areas to determine its compliance with government policies and environmental standards.
  2. Environmental Management Audit – This environmental factory audit tests the organization’s environmental management system (EMS) and determines its accuracy.
  3. Functional Audit – This factory audit checks for specific areas of environmental concern. Waste management systems, pollution control mechanisms, etc., are investigated thoroughly to identify areas of improvement.

Structural Audit –

A Structural audit is essential to determine the health and strength of a civil-engineered structure. Understanding the integrity of the material used in the construction, evaluating the building’s floor plan, understanding if proper steps are taken to ensure fire safety and electrical safety, examining how well the members employed in the building are trained for safety evacuation under abnormal scenarios is all a part of this type of factory audit.

Structural observation – deflection, leakage and dampness, cracks, etc. are made, and a report is finalized with explicit mention of the tests undertaken during the entire audit, the loopholes found in the structural integrity of the building, and the areas of improvement. 

Structural audits are necessary to ensure the health and safety of people residing and working on the premises. Different aged buildings require a structural audit at different times. Usually, any building reaching 5-10 years of construction age must be audited at least once in 3 years. 

Benefits of Factory Audit

A factory audit has more roles to play than one. It serves different purposes across industries. Every kind of factory audit comes with its advantages. Let us go through some of the main benefits of conducting a factory audit-

  • Avoid any scam or corruption from the supplier’s end by making an informed decision.
  • Ensure working with partners and suppliers will provide the best quality products while maintaining standards as per regulations.
  • A factory audit saves you time from the unnecessary hassles of checking the supplier’s input during manufacturing.
  • A huge load on the pocket is removed. Additional costs that importers may bear due to high wastage of raw materials or defective items can be significantly decreased with timely factory audits.
  • The practical testing of quality management systems during factory audits ensures your end products are secure, safe, and of par quality.
  • The risks of receiving non-compliant products become almost negligible.
  • Keep a solid check on a supplier’s integrity and the company’s processes to ensure they align with your standards.

Let VERGER Guide you with Factory Audit.

VERGER Group is an authorized body conducting factory audits and inspection services for more than 2000+ clients globally. We are leading the way in handling on-site factory audits across industries. We have a range of auditors qualified to deal with different factory audits.

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