China is one of the biggest manufacturing hubs in the world, and finding the right supplier can be overwhelming. Factory audit is the last and most crucial step in sourcing a suitable supplier for your business. Conducting factory audits in China can help ensure that the supplier can deliver the products within a specific time frame.
Sometimes Chinese manufacturers display a Sedex 4 Pillar mark on their websites, catalogues and trade show booths. This is meant to show the quality level, compliance with international standard and reputation of the factory. But what does this sign exactly mean?
Sedex Audit explained
To give you a little background, Sedex stands for Supplier Ethical Data Exchange. It is a not for profit organization that aims to help businesses manage ethical issues through in-depth site audit. Their website provides buyers, sellers, suppliers, and auditors a platform to share ethical data to their customer so that they, too, can see the audit results.
Sedex vs SMETA- What’s the Difference?
SMETA (Sedex Members Ethical Trade Audit) is an ethical trade auditing methodology developed by the Sedex Associate Auditor Group (AAG). According to the Sedex website, it is not a certification process or a new code of conduct, but it is a set of guidelines for ethical audits. The methodology aims to minimize the need to conduct multiple audits and to raise the improve the global supply chain.
Through the Sedex website, customers can check how their supplier work to meet companies’ ethical and social standards. Audit standards are flexible and are meant to be used in line with local laws and Ethical Trading Initiative (ETI) code.
Factory Audits in China: The 4-Pillar Audit
There are two types of Sedex audits under the SMETA methodology; the 2-Pillar and 4-Pillar audit. The 2-Pillar audit focuses on
- labor standard and;
- health and safety
The 4-Pillar audit is more comprehensive. It covers the elements in 2-Pillar audit plus two extra modules:
- environmental assessment and;
- business ethics
When sites undergo Sedex 4-Pillar auditing, businesses are able to identify which areas of production need improvement. Not all members are required to undergo such comprehensive auditing though. Hence, it is essential to determine when this type of audit is required.
Passing the 4-Pillar factory audits in China audit can be rather difficult for some companies. Some of them fail to meet social and labor standards such as minimum wage, working and resting hours, overtime, working conditions, benefits, etc. These are happening because factories are trying to keep costs down. Companies with Sedex audit would have a higher product cost as keeping better working conditions for workers would cost them more.
Benefits of Factory Audits in China
We are familiar with stories of unfair treatment of factory workers, irresponsible dumping of industrial wastes, and illegal business practices. As business owners, you want to make sure that your supplier complies with international labor laws and manufacturing standards. Here are the benefits of conducting factory audits in China.
- Protection of Factory Workers: It’s important to ensure that the work place is safe and hazard-free and that workers receive proper compensation and benefits. Factory audits help identify issues and improve labor standards.
- Protection of the Environment: The addition of environmental assessment allows auditors to check whether factories comply with existing local laws.
- Improved Business Image: For suppliers, it’s an opportunity to prove that they treat workers fairly and that they are not compromising their safety and well-being. In addition, comprehensive audits allow them to improve their performance.
What Information Do General Audits Include?
Before an audit you will need to prepare a factory profile which includes the following information:
- Date of foundation
- Legal status
- Number of office staff
- Number of worker
- Factory Manager
- Main Products
- Main Market
- Annual Turnover
- Business License
- Safety Certificate
- Communications Infrastructure/Contact Numbers
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