A Supplier Audit Checklist [Infographic]

Effective, efficient suppliers are the basis of a strong supply chain. But all too often, organizations rely on incomplete or outdated supplier data to make decisions that affect customers, revenue, and the overall business.

The Essential Supply Chain Audit Checklist: Supplier Audits is a step-by-step guide to evaluating your suppliers. Download the infographic to learn more about what to look for in your next supplier audit.

What Is a Supplier Audit?

A supplier audit examines the strategy, execution, resources, and processes of a particular supplier. The goal is to get a holistic view of the supplier and capture the data you need to make informed decisions about the supply chain.

Organizations may conduct supplier audits to:

  • Better understand the supplier’s’ processes and standards
  • Ensure quality controls are in place and working effectively
  • Identify opportunities to reduce waste or inefficiencies
  • Identify potential issues before they affect the customer experience
  • Forecast production needs more accurately
  • Understand the root cause of production issues

A supplier audit helps you gather important data points, which helps you analyze the overall supply chain and see where there are opportunities to improve.

Before you start, make sure you have a clear strategy in place to guide your audit. Sit down with stakeholders to get everyone on the same page about key requirements for your supply chain. Depending on your business, these requirements could be customer service goals, such as shipping all items within X days of the customer order, or internal benchmarks, such as maintaining certain productivity levels.

Supplier Audit Checklist

Use the following checklist to learn more about the critical components of a supplier audit and what to look for in each of your suppliers:

1. Strategy

No supplier can guarantee long-term success without a well-defined strategy. The first task in the audit is to evaluate the supplier’s overall business strategy, paying particular attention to:

  • How they define and measure business goals
  • How they describe their commitment to customer service
  • How they leave room for flexibility and adaptation
  • How they approach external opportunities
  • Their approach to strategic risk

Make sure that the supplier’s strategy is clear and measurable, enabling you to track improvements and declines over time. In addition, ask multiple people—ideally at different levels—about the supplier’s strategy to see how that vision has been shared throughout the company.

2. Workforce

Your suppliers—and by extension, your entire supply chain—are only as strong as the people within it. Each area must have the right people with the right skills to fulfill the company vision.

The auditor should interview and observe employees at every level to ensure:

  • Appropriate expertise levels
  • Sufficient opportunities for training and continuous improvement
  • Employee actions demonstrate a strong company culture
  • Accountability measures are in place
  • Processes are in place to address performance issues

3. Processes

The consistency and reliability of your suppliers depends on well-documented processes. The auditor should take inventory of the internal processes in place, ensuring they are well-defined are well-executed in every department.

The auditor should ensure there are efficient, practical processes in place for:

  • Data management and refinery
  • Planning
  • Quality control
  • Execution (scheduling, procurement, production, and distribution)
  • Monitoring (progress, growth, and potential fraud or risk)
  • Decision-making
  • Defining management roles and structures
  • Managing relationships with business partners

Wherever possible, the auditor should benchmark processes during the supplier audit to make it easier to gauge year-over-year progress.

4. Information & Technology

The modern supply chain depends on technology at every turn. Whether it’s forecasting demand, receiving orders, or communicating with business partners, your supplier should be taking advantage of technology.

The auditor should investigate the IT systems and tools in place to see how they are driving business forward. During the audit, check to see if the IT system and capabilities support:

  • Managing demand
  • Sourcing
  • Cataloging
  • Purchasing
  • Inventory management
  • Quality control
  • Shipping
  • Employee training and support
  • Customer support
  • Relationships with vendors and business partners
  • Availability to business partners

5. Resources

The physical resources your supplier has at its disposal can have a huge effect on your business. Strategic facilities, locations, and personnel can affect everything from customer service availability to delivery times. By evaluating resource levels during the audit, you can set expectations and reduce the risk of costly surprises down the road.

The auditor should evaluate the entire portfolio of resources, including:

  • Personnel and support levels
  • The number of plants, storage locations, and delivery points
  • Locations that meet your business needs
  • Efficient allocation of functions, tasks, and inventories across locations

Download the Supplier Audit Checklist

Supplier audits are a great way to take inventory of your supply chain and make sure your suppliers are set up for success. By covering the six areas outlined above during your next supplier audit, you can get valuable data and insights that strengthen your entire operation.

Download our infographic: The Essential Supply Chain Audit Checklist: Supplier Audits to prepare for your next audit.