FACTORY AUDIT REPORT

Supplier name: _______________________

Factory name: _______________________

Date: _______________________

Auditor(s): _______________________

Product Category: _______________________

Factory address: _______________________

1. SUMMARY OF FINDINGS
1.1 Observations and conclusion

General organization in the factory
Good/Average/Bad
Comments: __________________________

Working environment (light, noise...)
Good/Average/Bad
Comments: __________________________

Motivation of top management
Good/Average/Bad
Comments: __________________________

Ease of mutual understanding
Good/Average/Bad
Comments: __________________________

Can they make our product?
Good/Average/Bad
Comments: __________________________

Do they have enough capacity?
Good/Average/Bad
Comments: __________________________

Do they already sell to our country?
Good/Average/Bad
Comments: __________________________

Do they understand our standards?
Good/Average/Bad
Comments: __________________________

Can they make our product?
Yes, for sure/Probably/Probably not
Comments: __________________________

Do they have enough capacity?
Yes, for sure/Probably/Probably not
Comments: __________________________

Do they already sell to our country?
Yes, for sure/Probably/Probably not
Comments: __________________________

Do they understand our standards?
Yes, for sure/Probably/Probably not
Comments: __________________________

Factory’s main focus
Low cost, high volume/ Intermediate/High quality, low volume/ Constant new product development
Comments: __________________________

1.2 Decision

Is this factory approved?
Yes/No
Comments: __________________________

Will close monitoring of first production run be necessary?
Yes/No
Comments: __________________________

2. GENERAL OBSERVATIONS
2.1 The company

Date established: ______________________________________

Total annual sales: ____________________________________

Annual export sales: ___________________________________

Biggest customer name: _________________________________

Biggest customer country: ______________________________

Biggest customer Quantity / year: ______________________

2nd biggest customer name: _____________________________

2nd biggest customer country: __________________________

2nd biggest customer Quantity / year: __________________

No. of employees (total): ______________________________

No. of production workers: _____________________________

No. of QC employees: ___________________________________

Time to get all components ready for production: _______

Time to complete production cycle: _____________________

Total lead time from PO to ETD: ________________________

2.2 Production processes

Production line observed was making : Type of product made on that line : ________________________

Process step 1

Number of operators needed: ________________________

Number of machines needed: _________________________


Process step 2

Number of operators needed: ________________________

Number of machines needed: _________________________


Process step 3

Number of operators needed: ________________________

Number of machines needed: _________________________


3. ABILITY TO CONTROL QUALITY
3.1 If the factory is small and has no quality system

Subjective opinion about the factory’s ability to deliver quality products consistently: ______________________________

3.2 If the factory says it has a quality system

Does the factory communicate requirements to its suppliers on its POs (or other documents)? __________________________

Are these requirements clearly listed? ______________________________________________________________________

Are incoming QC results recorded in a formal report? __________________________________________________________

Are clear procedures given to each operator and to the QC staff, for each job? ______________________________________

Are conform samples available to workers in production and QC areas? ___________________________________________

Are in-process QC results recorded in a formal report? ________________________________________________________

Does final QC occur before or after packing is completed? ______________________________________________________

What proportion of products is checked during final QC? _______________________________________________________

Are there QC staff solely dedicated to final QC? How many? Do they only do QC, or also a finishing operation at the same time? _______________________________________________________________________________________________

Are final QC results recorded in a formal report? _____________________________________________________________

Is the first-pass yield displayed on a wall, and tracked day-by-day and line-by-line? __________________________________

Are numbers and details of customer complaints displayed on a wall? _____________________________________________

4. ABILITY TO CONTROL COSTS IN THE LONG TERM
4.1 Overhead costs

Are top managers (general manager, production manager, finance manager, sales manager, QC manager) part of the owner’s family? Or are they professional managers? _________________________________________________________________

What is the standing of the factory building(s)? _______________________________________________________________

Are there several empty floors? ___________________________________________________________________________

Can you see recent investments in expensive machinery? ______________________________________________________

How many of these expensive machines are idle? Is it because of poor maintenance, or because of low production volume? ___________________________________________________________________________________________

4.2 Quality system

See part 3.2.

4.3 Maintenance

Is equipment failure down time calculated? ____________________

Are there checklists for maintenance? Do they seem to be followed? __________________

4.4 Visual control

Is the number of pieces per labor hour displayed on a wall, and tracked day-by-day? ____________________

Is the amount of scrapped material displayed on a wall, and tracked day-by-day? ____________________

Is the total unit cost displayed on a wall, and tracked day-by-day? __________________

4.5 Degree of “lean-ness”

Can you see a lot of inventory kept before production and kept between each production step? ____________________

5. PRODUCTION SPEED
5.1 Organization

Before a new production is launched, are some jigs / tools prepared by the engineering department? ___________________

Is pre-production inventory well organized? ___________________

Is work-in-process inventory stored in a predictable way, or do people need to look around to find what they need? ______________________________________________________

Where do the components used in production come from? How long does transportation take? _____________________

5.2 Planning

Is production organized as a continuous flow, without any work-in-process inventory visible in the workshop? _________________

Is there a kanban system?_________________

Is there a production planning, with details for each workshop, and updated every day? Is there no production planning at all?_________________

Is there no production planning at all? _________________

5.3 Flexibility

Is there a list of approved subcontractors, who can take over part of the job? For which process steps? _________________

Is there a power generator?_________________

5.4 Maintenance

Is equipment failure down time calculated? _________________

Are there checklists for maintenance? Do they seem to be followed? _________________

5.5 Visual control

Is the proportion of on-time shipments displayed on a wall, and updated at least weekly? _________________

Is the time to make one piece, from start to finish, displayed on a wall, and updated daily? _________________

5.6 Degree of “lean-ness”

Can you see a lot of inventory between each production step?_________________

6. SOCIAL COMPLIANCE
6.1 Fire prevention

Are there enough fire extinguishers (in workshops, dormitories)? Are they accessible, and up to date? _________________

Are there enough emergency exits? Is it possible to lock them? Are they used as storage areas? _________________

6.2 Worker protection

Do workers have appropriate personal protective equipment (gloves, masks, glasses, safety boots)? _________________

Are there enough first-aid kits? Are they available and full? _________________

6.3 Environmental policy

Does production generate a lot of waste? Is this waste treated? _________________

Has the factory invested in energy-efficient equipment? _________________

6.4 Working hours

Does the factory respect Chinese law of 44 hours a week with maximum overtime of 3 hours a day? _________________

6.5 Child labor

Look at the list of employees, and check if all are at least 16 years old.___________________

Select 2 young employees at random, and ask to see their ID card._________________

6.6 Others

Labor contracts: Ask to see the labor contracts of 2 workers taken at random. Chinese law requires each employee to sign a labor contract. _____________________________________________________________

Management-worker relations: Do the operators get nervous when you watch them? ________________________________

7. ENGINEERING CAPABILITIES

How many designers are there? _________________________

How many designers can read and write English? _________________________

How many engineers are there? _________________________

How many engineers are dedicated solely to new developments? ________________________

What software do they use? _________________________

Can they show examples of complex new product developments successfully completed recently, in collaboration with overseas customers? ________________________

Does the supplier understand that they cannot sell products developed for a customer to other customers? _______________

Does the supplier show products developed for customers in their showroom?______________________

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