Internal and Supplier Audits: What Are They?

In most current markets, there is a multitude of choices –  a long litany of competitors all offering consumers a claimed “best” option for their desired product or service. So, when pricing is relatively close on these options, and even when it’s not, what separates one company’s offerings from another? It’s simple, quality.

Today, manufacturers and services providers are working diligently to improve, develop, and evolve their customers’ experience in order to differentiate themselves and stand out in these crowded industries. Quality is at the foundation of a great customer experience; therefore, a strong focus is placed on the scrutiny, review, and auditing of the management systems put in place to ensure the initial quality and process effectiveness of a new product or service before it’s launched. However, what happens to these systems as time goes by? How do you stay proactive to position your company ahead of its competitors by making sure your quality doesn’t slip? 

Internal First-Party Auditing 

Internal auditing is usually performed on an organization’s process(es) to validate that they meet or exceed the requirements or standards set forth by the company itself. Most commonly, internal audits (sometimes referred to as First-Party audits) are generally requested to determine the effectiveness or efficiency of a company’s current Quality Management System and to analyze how accurately that system is being adhered to. In addition, internal audits are required to be conducted by the quality, environmental or safety management system standards themselves. In other words, if your organization is already certified, then you must perform an internal audit at various points to maintain your 3rd party auditing certification.  The name “Internal” or “First-Party” auditing derives from the fact that these audits are mostly conducted by auditors that are employed by the organization being audited, therefore it is not the type of audit that be considered unbiased.

A successful internal audit should accomplish these key components and benefits for the companies that invest in it:

• Uncovering issues or possible non-compliances before they are flagged by a Third-Party audit
• Reduction of waste by identifying inefficiencies
• Locate potential weak spots or needed updates to your QMS
• Consistent maintenance and updates to quality controls

If an internal audit is well organized, planned, and implemented it can supply major value to a company’s quality management process and assist in lowering overall process cost.

Supplier Second-Party Auditing

Supplier audits conversely are usually administered, not on the organizations themselves, but as the name suggests, on the manufacturing companies or providers that supply the components or parts needed by said organizations to produce their complete offerings. If there are quality issues with these supplied parts or assemblies by a secondary party, then the results can be devastating to the original organizations – low production efficiencies or total loss of production, late deliveries, defects, costly recalls, and major financial investment loss, are all just some of the results of poorly provided components from a supplier. As such, choosing a supplier that has the bandwidth and capabilities to deliver high-quality parts and components, on time and on target, is critical to organizations that rely on second-parties to produce their products. Supplier audits (second-party audits) are usually contracted by the customer (organization) for the supplier, the terms of which include specifics on delivery expectations, prices, quality requirements, and any other specifications agreed to.

Some of the benefits of a strong supplier audit are:

• Peace of mind when selecting the sources for components
• Finding alternatives while trying to reduce costs
• Proactively discovering quality issues with a supplier
• Confirmation of corrective actions if past issues exist

Ensuring organizations supply chain strength starts with a thorough supplier audit that works to verify all a company’s suppliers meet or exceed requirements set forth by a QMS or similar standard. After all, one of the biggest goals of a supplier audit is to prevent any quality issues from affecting the end-consumer.

So, does your organization need to do a second-party audit to get a clearer picture of your suppliers’ capabilities to meet your quality standards? What about the proverbial look in the mirror? Are there issues within your own company that need to be addressed to improve your internal processes and their QMS? By understanding the difference between first and second-party audits and what can be gained from each, you can easily utilize each in your organization when the situations call for it – working toward the improvement of your quality management systems as well as overall quality.

To learn more about our auditing services, visit our supplier solutions page.