Supplier management plays a key role in companies’ competitiveness and sustainability. It ensures businesses source quality products and/or services at competitive prices with minimal risks. This is why implementing a supplier evaluation system, based on supplier audits, is essential. It’s a strategic approach to guarantee the overall performance, quality and reliability of businesses supply chains.
H2 - Why conduct supplier audits?
From a company’s perspective, the purpose of conducting a supplier audit is to evaluate the performance and compliance of suppliers. This audit process aims to help businesses verify their suppliers’ ability to meet their own requirements (regarding quality, price, deadlines…), as well as comply with current standards, regulations and ethical practices. This assessment culminates in a corrective action plan to be implemented.
In their book "Les audits fournisseurs" (Supplier Audits), Philippe Benollet and Joël Khébian share their precise vision of supplier auditing: "It is a methodical, structured, independent and documented approach of examination, interviews, questioning, observation, listening, and searching for evidence within a system to confirm or deny the deviation of this system from a standard, model or norm."
Performing a supplier audit can be part of a supplier evaluation system, but also the selection of new suppliers, quality assurance, or even preparation for certification (such as the ISO 9001 certification) within a company. Audits can be conducted internally or externally. In an internal audit, it’s generally the company’s quality or procurement department that takes the lead; in an external audit, it’s either a subcontractor or an approved organisation conducting certification.
Supplier audits have multiple benefits for companies. Firstly, this approach helps in reducing potential risks, strengthening quality assurance and ensuring regulatory compliance. It plays a key role in smooth company operations, which enhances profitability while improving end customer satisfaction.
Audits also promote transparent and efficient communication with suppliers, laying the foundation for mutual understanding and good collaboration with a focus on progress. In this sense, they help improve supplier relationships.
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System audit evaluates the entire supplier quality management systems, examining the supplier’s overall performance to ensure it meets quality standards and requirements.
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Process audit verifies operational procedures and processes.
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Product audit focuses on product quality control.
Key steps of a supplier audit
To succeed in your supplier audit, preparation and collaboration with suppliers are essential. There are eight major steps to follow with precision, attention and method.
1. Defining the framework conditions
The first step of the supplier audit is to determine its general framework. This covers the frequency, format and purpose of audits, as well as the person responsible for implementing it, suppliers involved, etc. Most often, audits are announced and conducted in situ, meaning at the supplier’s location. However, it’s also possible to conduct unannounced audits or remote reviews of the supplier’s documentation.
2. Defining the criteria
The second step focuses on defining mandatory criteria, which will be communicated to suppliers. It can be useful to build a standard criteria catalogue, which can then be adjusted case by case. Criteria may include delivery deadline compliance, claims management, secure data processing, on-site working conditions, sustainability…
3. Building your audit plan
The third step involves detailed planning of the next audit. The company starts by gathering all necessary documents such as supplier contracts, previous audit reports, etc. Then, it determines the procedure, different steps and areas requiring attention. All key questions can be recorded in a supplier audit checklist.
4. Organising a kick-off meeting
Before starting the actual audit, it’s important to present the approach to the concerned supplier. All stakeholders must have a clear idea of what to expect. This involves explaining the objective, different steps and benefits each stakeholder can derive.
5. Conducting the audit
The audit consists of recording the current state to compare it with the desired state. Simply follow the audit plan step by step and evaluate supplier performance according to previously established criteria. Auditors can interview contacts, consult documents or conduct their own observations. They must document each action and finding, especially regarding quality issues.
6. Writing the audit report
To synthesise the results of the supplier audit, the company creates a report. This document contains general information about the supplier and audit framework, overall score, detailed description of detected deficiencies (with evidence where possible) and concrete improvement suggestions.
7. Reviewing together
After this synthesis work, it’s important to organise another meeting with the supplier to share the assessment. This is an opportunity to discuss audit results, identify improvement areas together and define next steps with precise deadlines.
8. Implementing corrective actions
The last step focuses on implementing the action plan. The supplier commits to applying measures to improve their performance. In parallel, the company should also consider lessons learned from this audit. It may be relevant to adapt certain processes, optimise supplier management…
Through regular supplier audits, the company involves its partners in a shared continuous improvement approach. This is how it builds and sustains efficient, reliable and sustainable partnerships. More broadly, this dynamic helps improve supplier risk management, optimise the supply chain and preserve brand image and reputation.
