The Factored Quality Guide to Supplier Audits

Supplier Audits

In Part 2, we get into the weeds of supplier audits.

Any consumer brand will know navigating from product development to warehouse inventory audits is a highly specific process. 

Fortunately, at Factored Quality, we’re experts on all aspects of audits that founders and startup operations teams don’t have the capacity to worry about. And we’re going to outline all of them in this series

In Part 2, we get into the weeds of supplier audits. 

Let’s dive in. 

Why every brand should perform factory audits

Let's start with some definitions. 

  • Factory audits: Inspections of facilities and their workplace practices and conditions

  • Social audits: Inspections to ensure correct human rights conditions in your supply chain and identify any shortcomings in ethical practices

  • Environmental audits: Inspections of suppliers to quantify and benchmark their environmental emissions

At Factored Quality, we see over and over that product quality is a relatively cheap advantage that pays itself back multiple times over. Conversely, a lack of product quality will cost you multiple times over. 

That's why we emphasize that all brands should prioritize risk aversion regarding product quality. Treat quality as the easiest way to elevate your brand’s status, recognition, and ultimate quality — because those are the traits that customers remember. 

With this, running factory audits, in-line inspections, pre-shipment inspections, and inventory audits builds a snapshot of the conditions of your products and the performance of your suppliers. 

QC is equally critical for large corporations and up-and-coming brands

Apple is an excellent example of a massive company with extensive quality control. For instance, anyone who purchases a MacBook gets to participate in the well-loved unboxing experience: Every detail of the product and packaging is immaculate because someone at Apple’s manufacturers inspected all of it. 

Here, we see that the emphasis Apple places on product quality pays itself back. 

Smaller brands may see this example and assume they don't have to go to the same lengths because they aren't producing goods on the same scale. But that's simply not the case. After all, if one of your customers opens up their package to find everything in it is subpar, every dollar you’ve invested into that unit goes in the trash. 

One-hundred percent of large companies prioritize quality control. Too many SMBs do not. Factored Quality is here to change that. 

FQ enables the smallest of brands to run efficient QC

Factored Quality conducts a hands-on, bespoke quality control process for every client, so we leave no stone unturned. Here’s a look into how we run efficient QC for companies of every size: 

Step 1: Onboarding

From the moment you partner with us, we dedicate an FQ team member to your account — no matter where your team is based. Everyone at FQ has a product and/or supply chain background and works from one of our global offices, from Hong Kong to Europe to North America. 

During onboarding, we assess all of your products and suppliers to tackle key questions, like: 

  • What quality control and product quality issues have you commonly encountered?

  • What drove you to partner with FQ? Was it a lack of supplier trust, or perhaps a consistent product defect? 

Step 2: Executing the inspections

At FQ, we design inspection checklists to fit every unique product and category. 

Next, we assign and deploy inspectors from our network of 2,000+ trained, certified, and vetted QC professionals, who specialize in inspecting your specific category or type of product. If you need higher-frequency inspections, we'll also build up a pool of go-to inspectors. 

Step 3: Inspection reports

Every single FQ inspection report includes a video of our team members walking through the findings. First, we explain how to read the report, as QC memos can be lengthy and complicated. Then, we unpack three essential pieces of information: 

  1. Any significant defects or issues we found

  2. Whether we believe you should take immediate action and how to go about it

  3. Supplier- and product-level analytics, which compare your suppliers’ performance (regarding product defect rates) with other local suppliers in the industry

3 reasons why Factored Quality recommends annual environmental audits

At Factored Quality, we specifically recommend running annual environmental audits to ensure your suppliers haven’t made any drastic changes — and, if anything, to see if they’ve improved their standards. Environmental audits also evaluate the supplier’s electricity, gas, and water consumption. 

Here are three reasons why these audits are especially critical for every brand: 

Reason #1: Standards for brand partnerships

Most retailers, brands, and organizations that you may want to partner with have environmental specifications. For example, if you want to partner with Disney or Amazon, they provide environmental guidelines you must follow. 

Reason #2: Trends in consumer expectations

Mainstream consumer demands have shifted: People care about how the goods they purchase are produced. Obtaining C2C or B Corp certification, for example, shows customers that you’ve achieved certain environmental standards. 

Reason #3: Regulations for selling internationally

If you’re selling in the EU, countries like Germany emphasize supply chain visibility, so you must account for your emissions. Plus, the FQ team predicts many countries across the globe will soon codify environmental audits into law, so now is the opportunity to get ahead of the curve! 

Case study: 2 ways Factored Quality audits save brands time and money

Our factory audits recently saved the day for two of our customers. Here are two ways we save consumer brands time and money while ensuring they work with only the best factories: 

1. Standardized social audits

We recently ran a social audit for an FQ client at two supplier locations. This brand was about to partner with a major media company and planned to launch retail. The media partner had strict supply-chain requirements for its partners. 

Fortunately, FQ ran our audits early enough in advance that we identified all areas of non-conformity at the supplier locations, granting the suppliers sufficient time to course-correct. We then conducted follow-up audits to ensure they’d successfully implemented changes. 

Thanks to our audit, the brand was able to launch their media partnership and break into retail — completely on schedule. 

Standard factory audits

Another FQ client hoped to expand production and partner with a new supplier. To understand the supplier’s manufacturing practices and quality procedures, we ran a standard factory audit at the facility. Our auditor uncovered significant issues, so the brand moved their search elsewhere. 

With Factored Quality’s auditors behind them, the brand gained visibility into a potential partner and avoided a major supply chain hiccup — and potentially tens of thousands of dollars in defects and rework. 

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