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Reducing Risk Quality Audits – 3/16/12

Reducing Risk Through Supplier Quality Audits

For companies with products that are not entirely vertically integrated, there are necessary dependencies with outside companies that, if not managed properly, can create added risks. These risks derive from outside supplier processes, procedures, people, and performances that are not 100 percent visible because many suppliers are remotely located, speak languages other than the company’s native language, and have their own supply chains upon which they too are dependent.

You may not be able to influence your suppliers’ suppliers, but you can considerably reduce your exposure to these risks by getting to know as much as possible about the internal controls and quality management of every company that keeps your company’s boat afloat.

Before you purchase any production material from an unknown source, you should perform the appropriate level of supplier survey. The formal procedure is known as a Supplier Quality Audit. Some companies just call them supplier surveys. Not all items in the following list may apply to your contract manufacturers (CMs) or service suppliers, so feel free to pick and choose the procedures that are relevant to the nature of the company you will be auditing.

Are the following procedures or practices documented and readily available?

  • Process introduction/installation. (Training and special instructions for your product.)
  • Inspection. (Should be a separate work center between work stations.)
  • Outgoing quality audit.
  • Internal process audits.
  • Preventive actions. (Safety and work center cleanliness.)
  • Continuous Process Improvement (CPI). (Regular meetings including production line workers.)
  • Modification and repair capabilities. (Avoiding the “dog pile” phenomena.)
  • Laboratory for onsite testing. (Functional and parametric.)
  • Statistical Process Control (SPC). (Required for catching yield numbers and failure trends.)
  • Operator training procedures. (Work centers should have employee training certificates on file.)
  • Component substitution controls. (Notifications to your company prior to any substitution.)
  • Machine operating instructions. (Posted near every piece of equipment.)
  • Introducing and implementing design change/revision. (ECO/ECN control.)
  • Product tracking. (Component and material traceability.)
  • Equipment maintenance. (Should have maintenance records for incident history and preventive maintenance.)
  • Calibration. (Test equipment calibration tags should be up to date.)
  • Data collection. (Serial numbering, lot management, and date codes.)
  • Documentation approval. (Check for authority levels and signatures.)
  • Notifying customer of material or process changes. (From their supplier on your products.)
  • Electrostatic discharge (ESD) protection. (Grounded to earth ground, smocks, and wrist straps.)
  • Packaging. (Handling instructions and package assembly drawings.)
  • Storage. (Secure and/or temperature and humidity controlled.)
  • Special processes. (If your company supplied special instructions.)
  • Scrap and rework controls. (Rework integrity for yield improvement and scrap count for materials.)
  • NPI process required. (Training on your company’s product.)
  • Environmental and regulatory compliance documentation. (REACH and RoHS.)
  • Assurance methodologies against receiving or shipping counterfeit materials or products.
  • Availability of all procedures to technicians and operators.

As you have probably noted, this inspection survey requires a very focused and comprehensive effort. Since the CM usually has most or all of the capabilities to purchase, assemble, and test a product, the survey must include all areas of concern as they relate to performance capability and process quality assurance. Often, because of the technical nature of the survey, the component engineer is part of the survey team and is assigned to the task of reviewing the CM’s Documentation Control procedures, ECO/ECN processes, test equipment calibration schedules, ESD precautions and controls, and some aspects of package and assembly handling. Purchasing is often part of the team and is responsible for auditing the company’s purchasing records and part management controls, including inventory and scheduling of material receipts.

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