A Factory Quality Audit Checklist To Assess Your Suppliers


A Factory Quality Audit Checklist To Assess Your Suppliers

Household goods manufacturing and supply chain operations are often vulnerable to compliance and regulation violations. With the pace at which the many complex parts of a supply chain can move, it’s no wonder that retailers who trust too willingly in their suppliers can land up in hot water when things don’t go according to plan. The only way to address these challenges head on is by conducting a quality audit. Discover our factory quality audit checklist that touches on quality management, social and environmental compliance here. An audit of your supplier’s factory is conducted to ensure that your supplier and their factory’s operations are able to produce your product to your expected levels of quality, as well as ensure compliance in your product’s destination market. This is not the only reason though… Carrying out audits also help to assess the risks that may be present with a particular supplier and provide direction on how you can go about managing that risk. Ultimately, the decision to work with a particularly supplier will be up to you, but your decision will at least be based on a trusted risk assessment with a presented improvement strategy. Our checklist takes you through a what a brief assessment of your supplier’s quality systems would/should look like. We will cover 3 main sections in this checklist:
  1. Quality Assurance & Technical Questions
  2. Social / Health & Safety Questions
  3. Environmental Audit Questions

How Does A Quality Audit Grading System work?

For each checkpoint, the following guideline should be used; N/A – Checkpoint not available or not evaluated. 0 – Major non-conformity – absence of procedure or proof of big discrepancies in implementation – a corrective action will be designed for this checkpoint. 1 – Minor non-conformity –  incomplete procedure or proof of discrepancies in implementation – a corrective action will be designed for this checkpoint. 2 – Acceptable –  procedures are available and implementation is acceptable, however opportunities for improvement exist – an opportunity for improvement can be designed for this checkpoint. 3 – Good – procedure and implementation acceptable, no opportunity for improvement identified. 4 – Best Practice – factory has designed and implemented best practice of industry.

Quality Assurance & Technical Questions

a factory quality audit checklist 1WHAT TO LOOK OUT FOR:
  • Quality manual and all procedures show revision control (sign-offs & dates), history of changes
  • Product quality yield data, problems and corresponding improvement actions, status of preventive/ corrective/audit results
  • Strategic and tactical objectives, goals, action plans, etc.
  • Analysis of field failures, inspection yields, resource needs, internal audit results, corrective action status, etc.
  • Management review meetings, goal setting, performance measurement, internal audits, action plans, customer surveys
  • Employee involvement/recognition program, Lean, Six Sigma, kaizen, SPC, 5-S, cost reduction programme
  • Corrective actions, trend charts, meeting minutes, non-conformance frequency & cost analysis
  • Management review meetings and corrective actions
  • Look for use of training aids and work instructions at work stations
  • Qualification records, certification history
  • Records of testing, production quality records, audit records, interview workers to validate training records
  • Job descriptions, job skills assessment, training records, training manuals

What if my quality assurance score is below standard?

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.


A factory quality audit checklist 2

What to look out for:

  • Procedure for training and communication and participation
  • Emergency preparedness and response plan, monitoring and performance measurements
  • Policies and procedures, health and safety trend charts, accident rate improvement history
  • Safety committee or group meeting minutes, accident investigation reports, safety audit reports
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. As a professional third party auditing company, API is able to provide their industry expertise and long time experience to aid you in achieving your social compliance certification.

Environmental Audit Questions

a factory quality audit checklist 3

What to look out for:

  • 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

Key Takeaways

A factory quality audit checklist allows you insight into your suppliers quality control processes and manufacturing capabilities, their strengths and weaknesses. This empowers you to strengthen those weaker processes where needed. A quality 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 compliance standards are actively being met by your supplier.
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.

3 Types of Factory Quality Audits Your Retail Brand Needs

Many retail brands today are littered with non-compliance, human rights and environmental violations. These organisations find themselves at a loss on how to handle this kind of supply chain complexity risk. So, how can your brand prevent all of this? Factory quality audits. These quality audits aim to identify, eliminate and reduce supply chain risks for your retail brand. They also offer continuous improvement strategies to allow for constant growth, awareness and a strategic competitive position in the marketplace. In this blog post, we explore the different kinds of quality audits that third-party quality providers can offer you, so let’s dive into what each audit can provide you with and what the benefits will be for your brand.

Technical Audit

Let’s begin by defining what a technical audit of a factory is; This is the process of evaluating and assessing your factory’s technical capabilities; whether or not they have a quality manual with all its quality systems defined from organizational structure to assessing whether or not a factory has any internal audit and inspection procedures. This audit will also assess the factory’s layout and whether or not there is scheduled regular maintenance and calibration of machinery. This audit is typically based on the guidelines of ISO 9001: 2015, which is an internationally recognised standard to ensure an efficient quality management system (QMS) of your chosen factory. The latest update has meant that the standard is more performance focused, and this is done by merging a process-based approach with risk-based thinking and adopting the Plan-Do-Check-Act cycle. ISO 9001 - Techincal Quality Audit According to the guidelines as laid out by ISO 9001:2015, they are roughly categorized into eight sections; five of which are mandatory for the QMS of your factory;
  • Requirements for a quality management system
  • Management responsibility
  • Resource Management
  • Product Realization
  • Measurement, analysis, and improvement of your QMS
Clauses one to three are not requirements, but are informative about the scope of this standard references to help understand the standard better, and terms and definitions that you may need to aid in the adoption of this QMS. What are the objectives of a technical audit? The objectives of hiring a third-party auditor to assess the quality management systems of your factory would be this;
  • To assess whether there is an effective and efficient QMS of the factory.
  • To assess whether or not this factory is able to meet your production requirements.
  • This audit will assess the potential risks you may be aligning yourself with.

Social Audit

The SA8000 was established by the Social Accountability International in 1997. Over time this standard has become a reliable framework that many retail brands and organisations adopt to eliminate human rights violations from their supply chains. Looking back at the sweatshop claims against Mattel in 2011 for its use of child and forced labour, not to mention illegal amounts of overtime that were agreed to under the table, these horrific situation still need to continuously be eliminated from today’s retail supply chains. Social quality audit The SA8000 framework can measure the social performance of an organisation in eight different areas; this is rooted by the management system element that can drive continuous improvement in all areas. This standard is valued for its meticulous approach to achieving certain levels of social compliance. The 9 SA8000 social compliance requirements are:
  • Child labour – No children younger than 15 years of age may be employed by any factory, as we can tell in the case of the above factory, this was not the case.
  • Forced labour – No person may be employed by a factory if they haven’t offered to do so voluntarily.
  • Health and safety – A safe and healthy workplace environment must be provided by the factory, who should also prevent any potential health and safety incidents and work related injury or illness from occurring. You would need to ensure that there is sufficient personal protective equipment (PPE) within hard-labouring factories.
  • Freedom of association and collective bargaining – All staff have the right to form, join and organize trade unions and to bargain collectively on their behalf.
  • Discrimination – A factory is prohibited from engaging in discrimination in hiring, remuneration, access to training, promotion, termination or retirement.
  • Disciplinary practices – A factory is prohibited from engaging in or tolerating the use of corporal punishment, mental or physical coercion or verbal abuse of employees.
  • Working hours – A factory must comply with applicable laws, collective bargaining agreements and industry standards on working hours, breaks and public holidays.
  • Remuneration – The right of staff to a living wage must be respected by the factory.
  • Management systems – Compliance must be reviewed and implemented to the SA8000 standard through developed policies and procedures.
If child labour is found within your supply chain, it results in an immediate audit failure! You need to ensure that your supplier complies with the requirements of SA8000 so that you can eliminate potential areas of risk that may be present in your supply chain. Once you receive your audit report, based on the findings, your supplier will have time to rectify any mishappenings, and this will then usually result in unannounced visits to assess whether any improvements have taken place. Key Benefits of a social compliance audit for your retail brand
  • Compliance according to the SA8000 framework will prove that your brand is committed to social accountability; from treating your employees fairly to ensuring compliance with minimum wage requirements.
  • It will by nature continuously improve the efficiency of your supply chain.
  • If your organization aims to operate internationally, this standard will stand you in good stead for any international tender.
  • This standard will ensure that you are globally compliant and that you reduce and manage risks accordingly.
  • This standard will also provide brand protection for your organization.

Environmental Audit

An environmental audit will assess whether or not your factory complies with environmental regulations; this will often be based on the ISO 14001: 2015 standards which are an internationally recognised family of standards. I want to go back to the above factory that was producing toys for Mattel; in the undercover investigation it was found that hazardous chemical products were used in the production process, but factory workers were told to hide them when auditors came in. Environmental quality audit There are many concerns with regards to a situation as the above 1. The chemical usage in the toys would likely not have met international regulation. 2. Hiding violations from an auditor only aids non-compliance and illegal production processes. 3. How are these chemicals affecting factory workers? How are they stored? How are they disposed of? The environmental audit procedure seeks to uncover the above issues, with the ultimate goal of eliminating those kinds of violations and ensuring a clean and well-managed supply chain. An environmental audit such as ISO 14001:2015 will assess the following;
  • The legal requirements according to the substances that are being used which would along with risk assessment document.
  • An audit would assess whether the factory has an existing Environmental Management System (EMS) in place.
  • An audit would assess the solid and hazardous waste situation of the factory and whether or not they have an appropriate procedure in place for the disposal of waste.
  • An environmental audit would assess waste water disposal, how and where you are disposing this waste water, this is often paired with waste water testing to know what kinds of chemicals are present that could potentially be damaging to nearby water canals.
  • An audit will also assess the CO2 emissions of your supplier’s factory.
  • An audit will assess the amount of energy and water that your supplier’s factory uses.
See the checklist we created on the types of questions an auditor may ask when visiting a factory. This would be coupled with the observation skills that a professional auditor would possess. **TIP The above audits assess your factory’s current operating procedures. It must be said that it is not uncommon to find a factory that complies with everything we have mentioned up until now. The key is to understand that these audits aim to highlight any major risks, but that upon receiving your audit report you will also receive continuous improvement suggestions, to aid your factory in achieving compliance and an excellent social and environmental rating.   So you may be thinking, that’s great I know what they will assess, but what are the felt benefits of an Environmental Audit? Good question, let me tell you why you need an Environmental Audit;
  1. It ensures compliance with international regulation.
  2. It encourages better environmental performance of suppliers.
  3. It reduces environmental impact.
  4. It reduces costs through a lower environmental impact.
  5. It provides a strategic competitive advantage for your brand.
So I pose the question to you – are you ready for an environmental audit?


Retailers today often only consider one or two of the above quality audits, but as consumer behaviour has shifted, you may want to consider being certified according to all three international standards. This would ensure that your organization achieves a strong competitive position in the marketplace. So let’s take a quick re-look at the benefits these can have for your brand;
  1. These audits will ensure compliance to international regulation
  2. These audits will provide a continuous improvement strategy for your supplier.
  3. These audits will ensure a well organized quality management system for your supplier.
  4. These audits will reduce your costs.
  5. These audits will strategically position you in the marketplace.
The insights of the above quality audits should provide you with enough information to decide on how you should manage specific supply chain risks. These audits aim to eliminate many of the common supply chain violations found and ensure the optimisation of your quality systems.

dive into our visual guide to show you why your retail brand needs environmental auditing today!


What Are The Common Reasons For Quality Audit Failure?

Unethical or morally gray manufacturing practices are not uncommon for many factories across the globe, most commonly situated in third world or developing countries, for their cheaper manufacturing options. The figures, from the UN’s International Labour Organisation (ILO) and the Walk Free Foundation, show 24.9 million people across the world were trapped in forced labour for 2016. These cheaper conditions translate into unregulated conditions with little to no regulation and monitoring of working conditions, most of them horrific. These situations have lead to an increase in monitoring and auditing solutions to try and regulate the some of the terrible working conditions that many retail brands have been susceptible to over the years. Despite this, there are still many that fail to meet certain international standards and regulations put forth, making it absolutely necessary to know just what you need to avoid! In this blog post, we dive into some of the most common reasons that households goods suppliers fail their quality audits and what you can do to make sure your retail brand doesn’t fall into this pool.

Technical Failures

A technical audit is used to evaluate and assess a factory’s existing quality systems from policies and organizational structures, to the defined roles and responsibilities of the factory’s staff. So what are some of those common reasons a supplier may fail their technical audit? Disorganised documentation – As mentioned above, your supplier’s quality policies, records, reports and all documentation will be reviewed. Many factories often run on outdated systems like old excel spreadsheets, which opens your brand up to human error and potential risks that can be avoided. Without adequate reporting procedures or quality policies, the likelihood that your production requirements will be met, according to specification and in compliance with its destination market, will often not be the case if you choose to work with a supplier that has undefined and disorganized systems. Calibration and Upkeep of Machinery and Equipment – Many factories are dotted between third world and developing countries. There is a reason why Europe and U.S.A prefer to source abroad. It is often a lot cheaper than what they can find within their own borders, but that does not come without its own set of challenges.   Calibration of machinery in quality audit Many factories struggle with resources and finances, which means their money will often go into sourcing raw materials for the next production before putting money into the servicing of their machinery and equipment. This will mean that when an auditor comes to inspect the factory and its layout that the machinery is often out of calibration or filled with too much oil, which can contaminate your product and potentially places your brand in a risky position. Not ideal.

Social Failures

A social audit assesses the social systems and structures that your supplier has in place. Social compliance audits are always in line with the standards as laid out by SA8000; Child labour – Many social audit failures arise from being socially non-compliant with child labour causing an immediate “zero tolerance” failure. This is a serious violSocial Compliance in a quality auditation. If this is discovered during your audit process, it is recommended to rather find a different supplier. There are no grounds where this is acceptable. Hazardous working conditions – Hazardous and unsafe working conditions are not unheard of in many third world factory’s across the globe and are often the cause of factory technical audit failure. Things like faulty Personal Protective Equipment (PPE), expired fire extinguishers, no clearly marked exit signs, exits not in working order, machinery that is in need of calibration or lack of safety gear found on heavy machinery can lead to audit failure. These safety violations are easy enough for your supplier to address and solve, so bear this in mind upon receiving audit results as you will often need to factor in corrective time for your supplier. Panasonic and Sony have been caught in supply chain scandals, which have created immense amounts of bad media coverage for the global electronic brands. They have been accused of unfair labor practices in factories, vastly underpaid staff and electrical components that are said to be sourced from parts of the world known to be inclusive of child slave labour.

Environmental Failures  

With regards to ISO 14001, while it’s not a mandatory compliance standard, it is a little more complex to navigate because of this. But as the rules of engagement in retail have shifted into the hands of the consumer, retail brands are forced to rethink the application of this standard within their supply chain. Consumers today, are interested in reducing their environmental impact on the planet and your brand should help them do just that. How you ask? By complying with the guidelines of ISO 14001:15 – In saying that what are some of the common reasons many factories fail environmental audits? Incorrect methods of waste storage or disposal – This is often a problem as many factories do not have the capability or facility to dispose of their waste correctly. If your factory disposes fumes into the atmosphere or disposes untreated water into sewerage systems, it is considered to be an environmental risk and grounds for audit failure. Often a certified third-party waste disposal company will need to come and collect your waste to ensure that is disposed of correctly; your supplier can receive certificates, stating correct disposal as well. Environmental Quality Audit Let’s take a look at how this could play out; Wal-Mart paid a criminal fine of $11 million and another $3 million to the Missouri Department of Natural Resources, for violating the Clean Water Act by illegally disposing of hazardous waste materials. This is a serious violation and a costly one at that, environmental violations are not taken lightly so bear that in mind as you proceed.  


Understanding the most common reasons for quality audit failure allows you insight into the kind of supplier your brand should be aligning itself with. These audits are complex (especially the social and environmental audits), and it is up to the observation skills of your chosen auditor that will determine the level of compliance that a supplier meets. The audit report that your retail brand receives will present you with a full picture of all the risks a third-party auditing company is trained to see. It will be up to you to make a final decision, bearing in mind the authoritative position consumer’s today are in, by putting your customers first and producing products in an ethical manner, you automatically put your brand first.

Let us know in the comments section if this has been helpful information for you.

Ever wondered whether environmental auditing was for you? Check out our visual guide to help you on your way!