Factory audit is conducted to ensure the supplier has a production plant which has enough capacity to produce the product and can manage to deliver the orders timely, the labor force is fully trained to design and construct a product, the raw material has good quality and the cost is according to market rates. This all is done in order to make sure that supplier is able to deliver the right order at right time, moreover, the factory audits also point out the lacking in a production department thus help the supplier to improve his work performance to survive in the market in a better way.
Factory Audit not only benefits suppliers but the other stakeholder as well. Suppliers do not feel it comfortable to run third-party audit in their company rather they believe to rely on their own quality assurance department, but an external or the third-party audit basically helps to achieve following goals.
For Suppliers
- Quality improvement
When an external team audits the production unit before, after and during production, it basically ensures that minor, major and critical defects are removed from the product and the supplier then tries to avoid same defects in future which helps the customers to get quality supply and they love the final product.
- Customer trust
When an external stamp that this supplier is good at production and meets all quality requirements than customer automatically feels safe to buy from that supplier rather than from those suppliers who appreciate internal audit teams only. The third-party inspector gets better feedbacks from the customers after visiting the firm physically and generates unbiased, realistic and valid reports that finally help supplier to improve himself and win customer trust.
- Reliable Inspection
The internal audit team may take many things for granted but an outsider will never overlook any detail and try to fix any possible error to make the firm 100% reliable, hence the external audit is always more detailed and reliable.
For Buyers
- Assurance of Factory Existence
The customers are now shifting to online order placements and the world of internet is full of scams, therefore, third-party audit reports confirm a factory actually exists.
- Unbiased Feedbacks gain loyal customers
Third party feedbacks are not biased therefore customers trust those firms easily who have external audits.
- Current overview of factory performance
The reports present the financial facts and figures, inclines/declines in sales per year, human resource and corporate social responsibility of a firm which makes customers to have a detailed overview in short time about firm’s performance. Such overviews help them to make quick decisions.
For Vendors
- Product Information
The vendor takes advantage of audit reports to look at the product line of a firm so that they can put bids directly to the firm that has more products they actually needed and this saves their time and money during order placement.
- Product Handling Knowledge
The audit reports also mention the details of warehouses, transportation, product handling, packing, storage and checking information so vendor already knew how and when to dispatch the products to/from the factory.
- Production Capacity Information
The information about the capacity of production of the firm helps the vendor to know how much order they can provide to a firm as per its capacity and resources.
Impact of Factory Audit on Business Growth
Customers are wise now and they ask information not only about the product but the firm that produced the product as well. Customers today believe that without knowing the details of firm and product, their order will be placed like as if they chose to fly blindly, therefore, the companies who have generated audit reports and financial reports fall among the top-rated companies for the customers. It is good to produce defect free products but it is far better to sale them efficiently as well as it is the only motive of a business.