Choosing the right suppliers (factory audit checklist)

Household goods manufacturing and supply chain operations remain under significant pressure, forcing the speeding up of processes in some cases to meet tight deadlines. An increasing need for agility and flexibility has introduced new risks as well as shortcuts and vulnerabilities that can lead to compliance and regulations violations.

With the pace at which the many complex parts of a supply chain must move to keep up with changes and disruptions, brands and retailers should be working with suppliers that can guarantee reliable outcomes without compromising the integrity of their processes and products. Strong visibility and understanding of the supply chain and adequate supplier mapping are essential steps for avoiding quality and compliance situations that don’t go according to plan.

The most effective way to address these challenges is to map your suppliers by performing factory audits, identifying areas of risk ahead of time and ensuring you work only with the most reliable partners. A factory audit will make certain that your supplier can produce your product to your expected levels of quality without jeopardizing supply chain integrity or compliance in destination markets.

Factory audits also help assess the risks that may be present with a particular supplier and provide direction on how to manage those risks.

The decision to work with a particular supplier will ultimately be up to you, but a factory audit will mean your decision is based on a trusted risk assessment with a presented improvement strategy.

The criteria for selecting the right supplier will naturally vary and depend not only on international requirements and regulations but also on industry best practices and brand values and guidelines. For example, you may request that a supplier apply stricter environmental measures to ensure eco-friendlier processes and reduce their impact on the planet.

Our checklist sample takes you through what a brief assessment of your supplier’s quality systems might look like, and touch on quality management, social, and environmental compliance.

The checklist example covers three main sections and includes some of the more common points when evaluating supplier performance in these areas:

    1.  Quality assurance & technical assessment
    2.  Social/health & safety assessment
    3.  Environmental audit assessment

The following guidelines can be followed for each process:

N/A:  Process not available or not evaluated.

0 – Major non-conformity:  Absence of procedure or proof of significant discrepancies in implementation. Corrective action will be designed for this process.

1 – Minor non-conformity:  Incomplete procedure or proof of discrepancies in implementation. Corrective action will be designed for this process.

2 – Acceptable:  Procedures are available and implementation is acceptable; however, opportunities for improvement exist. An opportunity for improvement can be designed for this process.

3 – Good:  Procedure and implementation are acceptable; no opportunity for improvement identified.

4 – Best practice:  Factory has designed and implemented the industry best practice.

Quality Assurance & Technical Assessment

Technical assessments will obtain an objective picture of your supplier’s organization and evaluate their capabilities in the following areas, among others:

  • Adequate quality management system and framework to achieve acceptable quality levels.
  • Relevant product knowledge and the ability to produce the products in compliance with international regulations and customer expectations.
  • Capability to mass-produce on time while maintaining the required levels of quality and safety.

When evaluating a supplier’s capacity, some of the most frequently considered points include:

Quality manual and procedures demonstrate revision control (sign-offs and dates), history of changes.

  • Product quality yield data, problems and corresponding improvement actions, the status of preventive/corrective/audit results.
  • Strategic and tactical objectives, goals, action plans, etc.
  • Analyses of field failures, inspection yields, resource needs, internal audit results, corrective action statuses, etc.
  • Management review meetings, goal setting, performance measurements, internal audits, action plans, customer surveys.
  • Employee involvement/recognition program, Lean, Six Sigma, kaizen, SPC, 5-S, cost reduction program.
  • Corrective actions, trend charts, meeting minutes, non-conformance frequency and cost analysis.
  • Management review meetings and corrective actions.
  • Investigating training aids and instructions at workstations.
  • Qualification records, certification history.
  • Testing records, production quality records, audit records, interview workers to validate training records.
  • Job descriptions, job skills assessment, training records, training manuals.

Example of a quality audit checklist:

API factory quality audit checklist
API factory quality audit checklist

What If My Quality Assurance Score Is Below Standard?

Thanks to its manufacturing and product knowledge and experience on the field, API is able to customize its QA solutions  based on your specific needs and requirements. API will provide the supplier information on how they can go about improving various things within a factory. This information will be relayed back you, the retailer, where you will gain insight into your potential supplier and their factory operations to ensure compliance across the board.

Social / Health & Safety Assessment

The objective of a social audit is to provide an unbiased image of a supplier organization and practices according to local laws and international standard as well as your internal code of conduct.

Thanks to an adequate assessment of your pool of suppliers, your company can protect its brand image and improve its competitiveness. Managing your social risk should bring associated costs saving and should also foster long-term cooperation with a selected pool of suppliers.

To evaluate your supplier’s ability to meet the expected social, health & safety requirements, some of the more critical areas typically covered by a social audit include:

  • Checking whether factories operate in compliance with laws specifically related to wages and compensation, working hours, child labor, forced labor, harassment, and abuse.
  • Examining conditions in production and residential facilities and their consistency with applicable laws and regulations
  • Reviewing emergency preparedness and response plans as well as monitoring and performance measurements
  • Evaluating whether all possible precautions are in place to reduce labor and safety risks

The social audit assesses the social systems and structures that your supplier has in place and is normally based on the standards as laid out by the SA8000 and ETI Based Code. As a professional third-party auditing company, API is able to provide their industry expertise and longtime experience to aid you in achieving your social compliance certification. In addition to this analysis, our team will also define a corrective action plan and can also help you in the implementation and follow-up of this list of actions.

Example of social audit checklist:

API factory social audit checklist
API factory social audit checklist

Environmental Audit Assessment

It’s not new that supply chains are under increasing scrutiny to ensure environmentally friendly processes. In the context that we are currently living it’s important to verify that your suppliers are aligned with the relevant requirements and regulations to ensure a sustainable supply chain, and that they comply as well with your brand requirements and expectations. The best way to obtain a good level of visibility is by performing and environmental audits assessment to evaluate all relevant criteria and improve the environmental and chemical performance of your suppliers.

In order to evaluate your supplier’s ability to respect the environmental requirements some of the most critical areas usually covered during an environmental audit will cover the below:

  • Environmental policy statement document
  • Records of agency/government inspection, procedures for measuring and monitoring environmentally sensitive activities
  • Record of purchases, waste stream and consumption; inventory control procedures
  • Records/use of; non-hazardous (RoHS/WEEE compliant) materials in production, biodegradable materials, returnable containers or packaging, recycling program, packaging materials made of recycled materials

API sustainability team can help you assess the environmental and chemical performance of your suppliers with an accurate evaluation and adequate action plan to reduce the impact of your supplier’s processes and ensure that you are in the right path to achieve your sustainability goals and meet your customer’s demands.

Our on-the-ground expertise and our strong presence on the field allow us to have a deep knowledge of the factories processes, challenges and the applicable regulations. We understand your processes, factories and products, and are able to provide bespoke sustainability services that will result in higher levels of efficiency.

Example of environmental audit checklist:

API factory environmental audit checklist
API factory environmental audit checklist


An adequate factory audit allows you to have a better visibility of your supply chain, starting with the relevant insights of your suppliers’ quality control processes and manufacturing capabilities, social and environmental practices to identify the best performing suppliers and those with the higher risk. This allows you to select your pool of suppliers accordingly and empowers you to strengthen those weaker processes where needed.

An adequate audit checklist will help ensure:

  • your factory’s quality systems are up to date, organized and well recorded.
  • confidence in the selection of your supplier based on checklist insights.
  • confidence in the quality of the product that is manufactured.
  • confidence that your supplier is actively meeting compliance standards, social and environmental practices.

This approach allows you to build a more collaborative relationship with your supplier, where you supplier has a more invested approach to your brand and its product. It helps to ensure top-class quality systems and a mutually beneficial relationship between supplier and retailer and a better budget allocation to focus where risks are high.

Interested in learning more about how API can help you with our audit solutions?