We have completed a project for a factory audit inspection on behalf of our automotive client in Europe.
It was not a surprise at all when we learned that the supplier is an important player in automotive industry when it comes to washers, nuts, pins and customized stamped parts- Fastener.
In fact, over 80% of Taiwanese auto parts manufacturers are exporting their components overseas, with the main export destinations are the United States, Japan, China, and the United Kingdom. Europe has also become a popular destination; in 2017, the ratio of exports to Europe accounted for nearly 30% of total auto parts exports. Also, Taiwan is the twenty-fourth largest importing country for the Italian auto parts industry.
What’s factory audit inspection?
Factory audit inspection is called factory visit that is normally performed by an individual or an organization. The purpose of factory audit inspection is to confirm the authenticity of suppliers background and to conduct a detailed supervision on manufacturing process. To ensure the buyers are able to trust and purchase from the new suppliers, the process will be done through a checklist. It includes many elements such as, environment inspection, warehousing condition, manufacturing process, worker safety.
Why does our client need to conduct a factory audit with the automotive manufacturer?
The story began when our client had decided to look for a new manufacturer for their automotive parts. Because the end customer is one of the well-known car makers, therefore, the quality of the car parts is important to our client’s reputation. Adding any new supplier will require the approval from the end customers, factory audit is one of the measures they must complete in order to proceed with the new supplier. The main requests are basically 1. Film and take photos of the quality control process 2. Conduct and record their manufacturing processes 3. Observe the working environment.
How was the factory audit conducted?
First of all, the client came up with a list on what to inspect, we didn’t disclose the information until the day of the audit. This is to ensure that we get to see the actual condition, including the manufacturing process, the conditions of machines, safety process for factory workers. Generally, the lists cover different aspects in terms of manufacturing, environment, warehousing, safety.
After receiving the list, we arrange with the factory in Taiwan to discuss the time and the client’s request. Then, we set off to complete the factory audit!
This time, we visit an automotive manufacturer in Taiwan that is specialized in Fastener, they play an important role as the main component suppliers for well-known car makers, such as Volvo, Volkswagen, Ford. The reason we have to execute the audit is because of the delay of the lead time and the short supply of raw materials on the factory’s side. Thus, our client is very anxious and worried about the delivery time, while they can not fly to Taiwan, the result of factory audit has become much more important in order to make sure all the exchange information is correct and unquestionable. The processes require trustworthy and transparent communications between the factory and us. We must ensure that we do not offend the factory or push too hard on the audit, at the same time, we are supposed to gather every details of the factory even though they may not be all friendly and nice.
Our report basically covers aspects including,
- The background of the factory: it’s not common in Taiwan, but in China, there are a lot of factories that claim they are the factories, and it turns out they are in fact just agents. To avoid the issue, we do background check for our clients before we start the audit process.
- The conditions and environment of the factory: it is to evaluate if the factory is taking care of the environment and customers would love to know that their products will be stored under a good condition. If the environment is not clean or tidy, it’s very likely that the result of manufacturing will not be sustainable or the processes may go wrong.
- The processes of workflow: this has been the most important item on our audit list- workflow. When we monitor the workflow in the factory, we can easily figure out what could possibly be the issue on the lead time, logistics, warehousing. If the workflow is not smooth, that means workers or products suffer in the process. It could lead to faulty products or wrong design.
- The manufacturing process: this is what customers care the most, they want to know if the machines are maintained frequently, how often they are maintained? On top of that, they often would love to know the process of the manufacturing and what could be improved on production.
- Safety of the workers: when we do the factory audit, we notice that factories often put on the safely gloves, goggles and gowns during the audit only. Once they take off the safety measures after we leave the scene, this will be remarked as ‘unqualified’. The safety of the workers is as important as the manufacturing process, a small accident can cause severe delay on the delivery time and is life-threatening to the operators.
What have we learned?
Face-to-face conversation is important
During this factory audit, we have been able to know the factory and the contact window more through conversations. By having a face-to-face conversation, it helps us understand more about the stability, financial status, background of the factory. Those additional information is very valuable to our clients when they are unable to visit and speak in Chinese with the factory.
We sometimes may know more than the clients do
Due to the language barrier and the relationship between the client and the factory, most of the time, the factory tends to be more careful when they reveal any information to their clients. Through the factory audit, in most cases, the factory shares more information and their personal thoughts with us. While we obligated to share all the information with our clients, we can communicate and deliver the messages on behalf of the factory in a neutral tone. It is to strengthen the business relationship and to offer a different perspective as an outsider.
Having a factory audit with your suppliers or manufacturers can be mandatory if you are doing business with worldwide clients, they request to have a third-party report in order to make sure their supply chain is well-managed and has legitimate background. Even though you are not doing business with clients that need a factory audit inspection, you should consider doing so. All the issues that occur on the production, lead time, logistics can be traced back during the factory audit. There will always be a reason why your suppliers are not doing what you need them to do, you can easily find out through us!
Ask Taiwan, your dependable sourcing and business partner in Taiwan
Reference:
https://www.cens.com/cens/html/en/news/news_inner_54066.html