A review of SQA's managed supplier audit program data shows that by doing your homework you can save time and money.
In managing global supplier audits for some of the world's largest companies, we have found that the cost of failure and rework are just as real in these quality programs as they are in the manufacturing processes that they support.
In the world of managed quality programs, failure and rework largely take the form of audits that are organized but do not take place, and audits that are organized, but must be postponed because of delays in acquiring critical information or permissions. In both cases, there are hard costs involved - from management time wasted, to travel adjustment/cancellation, to under-utilization of auditing resources. And the majority of cases are avoidable with a little extra up-front 'homework'.
After reviewing several thousand audits managed by SQA over the last year, some strong trends emerged regarding delays and cancellations. Of the audits that were delayed, almost half (47%) were due to insufficient information. More specifically:
- the need for the audit was not confirmed by all stakeholders
- the supplier contact information was inaccurate
- the product was being purchased from the supplier was unclear or unspecified
- the exact location of the supplier facility was not confirmed
- the supplier did not know what product was being sold to the client
In order to address this issue, a 'minimum information' baseline should be established to ensure that the audit program team have enough to go on. For SQA, we implemented this through STEPQ's self-validating online audit request forms - something that has significantly reduced the number of delayed audits.
Second to insufficient information, we found that 20% of the delayed audits were the result of supplier reluctance to receive an audit. This required intervention from stakeholders to help facilitate a suitable agreement - again at the expense of the stakeholder time and the audit schedule. In order to address this issue, good, early communication with the supplier is essential - even at the supplier agreement stage. For SQA, we use a variety of boilerplate letters, reminders and follow-up alerts to ensure that the supplier knows what to expect, and what is expected of them.
In addition to audit delays, there were a significant number of cancelled audits. Of those that were cancelled, we found that 56% were 'false starts' - because stakeholders determined that they were no longer needed (usually after a delay and escalation). Second to false starts, 13% of audits that were cancelled were because the supplier no longer does business with the client, or had been 'deactivated' as a supplier. In these cases, the remedy is the same as for audit delays - gather confirmation up-front. As mentioned above, once we implemented this through STEPQ, we experienced a significant reduction in cancelled audits.
Every audit program will incur different costs for delays and cancellations - but there will be costs. These costs are avoidable through better preparation and maintenance of supplier data.
Have you been doing your homework?
