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How to evaluate a potential vendor’s quality system?

Most everybody knows that it is wise to get a feel for a potential supplier’s ability to produce a given product BEFORE placing a PO, but not every buyer knows how to organize a quality audit. Here is an overview of the process along with some templates from the QC experts.

It is essential to do a factory audit to review the QC system of your top potential suppliers in advance of placing a Purchase Order (PO). Depending on your budget constraints, you may choose to audit all the top candidates or perhaps just one or two. But it is essential to have some kind of on-site audit done. As the costs are generally hundreds of USD per audit when hiring a 3rd party auditor, rather than thousands, I tend to audit the top four or five suppliers to give myself the best odds of finding that perfect match.

To give the reader a feel for what a typical factory audit consists of, I would like to provide two examples. Please keep in mind that the templates below are used by engineers, trained in auditing. But it is my hope that simply reading over how the experts do it, readers can pick up some themes that they could apply to their own projects. For reference, know that the going rate at the time of writing for CSIC corporate sponsor Asia Quality Focus (www.AsiaQualityFocus.com) to conduct the simple factory audit (sample below) is just U$D 268 man day and the vast majority of audits are conducted in 1 or 2 days, depending on the size of the factory in question.

So unless you are familiar with QC standards and how Chinese factories are set up, it is probably best to leave quality systems auditing to the experts. But, if you are on a tight budget and don’t have the funds to hire the experts, here are some tips to keep auditing costs down:

i. Audit only the top 1 or 2 factories.

ii. Join the auditor for the initial factory audit, study their methods, learn the template, and do the next factory audit yourself. I don’t advise this option, but it is an option when on a tight budget. Most auditors will be happy to have you tag along, because if they are professional and do a great job, the buyer will see the clear value and probably opt for the auditors to do the rest of the audits.

iii. Make your own template based on the samples below and conduct your own audit as a last resort if you are flat broke and can’t hire a professional for a few hundred USD。

 

I’ve been in sourcing for 10+ years and I still leave this function to the auditing professionals, so don’t feel embarrassed about getting help! It may be turn out to be the best money you spend in China.

Reference Links for Audit Templates:
http://chinasourcinginfo.org/wp-content/uploads/2010/09/AQF-EFA%20Report%20Sample-Furniture.pdf

http://chinasourcinginfo.org/wp-content/uploads/2010/09/CQF-EFA%20Report%20Sample-Speaker.pdf

Side note:

This article was about how to audit the QC system of a factory. But often an audit of financial stability and business reputation goes hand in hand with a QC audit.  This type of due diligence will be covered in upcoming blog posts, but to get a feel for the types of companies that can provide business intelligence, take a look at CSIC corporate sponsor: www.CBIconsulting.com.cn In short the QC audit confirm the factory has the ability to produce your product while the due diligence verifies that the supplier is not likely to run away with your deposit and has the financial stability to be around to complete your order.

 

Wishing you successful China Sourcing!

Mike Bellamy

Author, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book/)



Mike Bellamy

Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). Author of “The Essential Reference Guide to China Sourcing” and founder of PassageMaker Sourcing Solutions. Mike is co-founder of CSA, the China Sourcing Academy.


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