PRODUCT ENGINEERING MANUFACTURING ENGINEERING

SOLUTIONS ENGINEERING ANALYSIS ENGINEERING CHANGE MANAGEMENT

Supplier Audit - Focus

Prepared by:
Bhaskar TGS

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 Table of Contents

MDMD

International
International India
India India
India
Ops
Ops 1. What
Strategic
Strategic is
CFOsupplier
CFO Audit Business
Business Business
Business Business
Business
Initiatives
Initiatives (EDS + ITS) (EDS)
(EDS) (ITS)
(ITS)
2. Objectives of Supplier Audit
HRHR 3. Scope&Accounts
of Supplier
Finance
& Finance
Audits
UK UK
Strategic
Strategic Mumbai
Mumbai
Accounts (WR)
(WR)
4. Who should face the Supplier Audit
Legal
Legal
/ / Chennai
Chennai
Contracts
5.
Contracts EDS
Outcome
EDS
(NA)
(NA) ITSITS
(India)of
(India) Supplier
GmBH
GmBHAudit (SR)
(SR)
6. Benefits of Supplier Audit
Compliance
Compliance Troy
/ Audit
/ Audit 7. Business Impact PS PS

8. Supplier Audit Focus Areas

Chicago Milwaukee
Milwaukee

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 What is Supplier Audit?

Organizations audit their suppliers to ensure the suppliers’

internal processes adhere to a defined quality standard that
are agreed on during selection of a supplier for Product or
Service Delivery.

During supplier audit, Procedures and processes that are

followed for Product or Service delivery will be reviewed to
identify non conformances in the development / delivery /
manufacturing process, change process, invoicing process,
quality process, and also the shipment process.

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 Objectves of Supplier Audit?

Organizations use the audit results to identify gaps that

affect their Product / Service quality metrics, such as:

1. Process gaps
2. Security gaps
3. Training Needs
4. Documentation issues

Based on the findings, suppliers are required to address the

issues in a specified timeframe.

Key suppliers are typically audited yearly. Those that have

poor quality metrics, are audited more frequently.

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 Scope of Supplier Audit

All information and documents exchanged between

Customer and Supplier, such as Contracts, Delivery
Specifications, Agreements, Work Instructions, etc are
the basis for Audit. Few are given below:

1. Master Service Agreement

2. Terms and conditions
3. Sub Contract Details
4. Purchase or Task or work Order

Supplier Audits are Performed based on any one or all or

combination of the above.

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 Who Should Face the Supplier Audit

Process owners in organizations should face the Supplier audits:

• Are the processes and metrics clearly defined so the internal audit process
can uncover unambiguous nonconformities?
• How does the process incorporate the results of prior audits to track
progress against previously discovered nonconformities?
• What process is used to identify potential root causes of nonconformities in
a timely way?
• Are corrective actions always taken to eliminate such root causes?
• How are the data on corrective and preventive actions reported and
analyzed?
• How do employees receive feedback on their respective nonconformities?

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 Outcome of the Supplier Audit

General impression of the production:

Conditions of Production, its organization, cleanliness, storage and retrieval
methodologies are appropriate.

Infrastructure :
Work area, Software Tools and Techniques, Condition of Machinery,
Production / Service plans and Regulations for process parameters in force

Internal and external communication:

Condition of the Information Procedure, what are the operating systems,
security measures for data protection?

Quality Management:
How is the quality management organized? How is the action of the QMS
described? Is there any documented process, in force, to measure customer
satisfaction?
Continued….

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 Outcome of the Supplier Audit

Testing Process and Methods:

Are the testing process and the used testing methodologies suitable? Are
they regularly monitored?

Internal audits:
Is there a quality management plan? Are non-conformities identified,
marked, properly stored and excluded?

Employee qualification:
Are the employee sufficiently qualified, motivated and regularly informed
about delivery time lines?

Delivery reliability:
Evaluation of reliability based on Quality Assurance Agreements. Is there a
traceability system? Are there any plans in case of emergency?

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 Benefits of Supplier Audits

• Establishment of customer satisfaction.

• The control of business operations is achieved.
Implementation of a business management review is
established.
• The supplier audit will help in contract review.

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 Business Impact

Information and product improvements can be shared for

common gain among suppliers and companies.

Accomplishments of supplier measurement that can take place,

risk mitigation exercises both proactive and reactive.

Knowledge can be integrated with deliverance of profit generating

opportunities for both organizations and the exploration of
additional, above and beyond contrasting business opportunities.

Ensure customers will have complete confidence that the

company’s products and services will always meet or exceed their
needs and expectations.

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 Supplier Audit Focus Areas

1. Statutory Requirements
i. Company Registration details
ii. Company’s Act
iii. Labor Law
iv. Staff ESI Details
v. Staff PF Details
vi. Employment Details as per the Govt. Statutory formats
vii. Government Holiday List
2. Human resource
i. Interview Evaluation
ii. Complete Employee file
iii. Employee handbook
iv. Back Ground Verification
v. Signed Non Disclosure Agreement

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 Supplier Audit Focus areas

3. Infrastructure
i. Building Perimeter Security
ii. Building Access Controls
iii. Third party Security
iv. Fire safety Systems
v. Backup Power Supply
vi. Air conditions
vii. AMC details for all services
4. Information security
i. Security Process and Procedures
ii. Information handling security
iii. Login access and Password security
iv. Data Security
v. Network security

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 Supplier Audit Focus areas

5. Business Continuity Plan

i. Process documents on BCP
ii. Present of secondary Site for backup and Restore
iii. BCP Testing and Readiness

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 THANK YOU!!!!

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