How To Audit a Factory: Key Steps, Tips and Considerations

When it comes to choosing which supplier your brand will work with for your promotions, it should be an informed decision based on laws and set standards. These can come through documents such as a factory audit. To help you make that huge decision, here’s a quick how to audit a factory guide for you!

First and foremost, a factory audit is a standardized verification process that provides brands and businesses vital information such as working conditions, management and production system of the supplier. It’s usually the last step before businesses close the deal with the supplier and start production.

Factory audits are also used to monitor the factory as part of supplier quality management. It makes sure the production remains high-quality and within the brand requirements.

This is important for every brand because factory audits inform them of information such as if the factory can handle their order, store the materials and the products properly and if they’re in compliance with the laws.

Types of Factory Audits

Before we dive into the process of a factory audit, you must first be informed of the common types of factory audits that you can use based on what product, business or services you offer. We listed six of them for you!

Manufacturing Audit

This type of factory audit focuses on the manufacturer’s capability of meeting the brand’s orders, producing products that meet the brand’s specifications and how it can handle risks that may come once the production starts.

It verifies if the facilities are capable of meeting your product requirements. It also checks if the brand and the supplier’s policies are matched and identify the competency of the factory management.

Ethical Audit

An ethical audit checks the supplier’s social accountability.

It is what ensures the brand that the factory they will work with adheres to proper work environments and labour policies.

This helps businesses avoid any problems in the future, strengthen their brand reputation in the market and comply with statutory requirements.

Structural Audit

This audit focuses on the working environment, the facilities and the planned practices in case of any emergency. A structural audit checks the safety of the buildings alongside checking for any damages and possible defects.

Its main benefit is the avoidance of disruption in the chain of production, preventing any possible accident and danger.

Environmental Audit

An environmental audit is done so brands can have a clearer image of their supply chain, and make sure the manufacturer complies with the brand’s environmental policies as well as international laws.

It can provide brands and manufacturers with what they can improve in their environmental policies and practices, and verify compliance of the supplier with local and international regulations.

Custom-Trade Partnership Against Terrorism Audit

The Customs-Trade Partnership Against Terrorism (C-TPAT) is a voluntary support program in which participants guarantee the safety of their supply chain from the concealment of any weapon.

For brands, it gives them assurance about the security of their manufactured products from the suppliers. It also strengthens the safety of the entire supply chain.

Food Supplier Audit

This food supplier audit is concerned with food hygiene and the food manufacturing process. It focuses on food safety and quality as well as the facility that stores and produces them.

It’s beneficial as it gives the end consumers more assurance about the food they’ll get from the brands. The food supplier audit also helps to verify if the supplier adhered to government and market food regulations.

How to Audit a Factory?

1. Preparation

The first step in the preparation phase is to clearly define the audit objectives.

This includes identifying the scope of the audit, the areas of focus, and the specific standards or criteria that will be used to evaluate the factory’s performance.

Prior to the actual audit, the audit team will typically conduct a pre-audit briefing with the factory management team.

During this briefing, the audit team will explain the audit objectives and process, as well as provide guidance on how the factory can prepare for the audit.

2. Areas to Evaluate

The auditor typically conducts a preliminary assessment of the factory to identify the key areas that need to be evaluated in greater detail.

This may involve reviewing documents such as the factory’s business license, quality management system, environmental management system, health and safety policies, and labor standards.

Based on the findings of this preliminary assessment, the auditor will then develop a more detailed audit plan, which outlines the specific areas that will be evaluated in greater detail during the audit.

3. On-Site Inspection

During the inspection, the auditor will evaluate the factory’s compliance with various standards and requirements, such as safety regulations, quality control processes, environmental impact, and labor practices.

The inspection usually starts with a physical tour of the facility, during which the auditor will examine the condition of the equipment, machinery, and production lines.

They will also assess the cleanliness and organization of the factory, looking for any potential hazards or safety issues.

The auditor will then review the factory’s documentation, such as permits, licenses, and records of production processes and quality control procedures.

4. Reporting

After the inspection is complete, the auditor will compile a report outlining their findings, including any non-compliance issues identified and recommendations for improvement.

The report may also include a risk assessment, which evaluates the potential impact of any non-compliance issues on the factory’s operations, reputation, and overall business performance.

It will be shared with the factory management and any relevant stakeholders, such as customers or regulatory bodies.

The factory will then have an opportunity to address any issues raised in the report and make necessary improvements before undergoing future audits.

5. Follow Up

The follow-up audit aims to ensure that the corrective actions proposed by the factory have been implemented and are effective in addressing any non-compliance issues that were identified during the initial audit.

During the follow-up audit, the auditor will review the corrective action plan (CAP) provided by the factory to ensure that it addresses all of the non-compliance issues identified during the initial audit.

The auditor will also review any evidence provided by the factory to demonstrate that the corrective actions have been implemented and are effective.

10 Tips in Conducting a Factory Audit

Performing a factory audit is a crucial step in assessing a supplier’s manufacturing capability, capacity, quality management systems, and compliance with regulations.

Here are some tips to help you conduct a successful factory audit:

Plan the Audit in Advance

Before conducting the factory audit, it’s important to plan it in advance. This includes defining the scope of the audit, identifying the areas that need to be audited, and selecting a team of auditors.

Review the Factory’s Documentation

Review the factory’s documentation before the audit, including their policies, procedures, and records.

Conduct Interviews

During the audit, conduct interviews with the factory’s management, staff, and workers to gain an understanding of their operations and identify potential issues.

Follow a Checklist

Use a checklist to ensure that all relevant areas are audited and all necessary information is collected.

Observe the Factory’s Operations

Use a checklist to ensure that all relevant areas are audited, and all necessary information is collected.

Verify Compliance With Regulations

Verify that the factory is complying with all applicable regulations and standards, including environmental, safety, and labour laws.

Check Product Quality

Check the quality of the products being produced to ensure that they meet the required standards and specifications.

Identify Opportunities for Improvement

Identify opportunities for improvement in the factory’s operations, including process improvements, cost reductions, and productivity enhancements.

Provide Feedback

Provide feedback to the factory’s management on the audit findings, including any non-compliances or areas for improvement.

Follow Up

Follow up on any corrective actions that the factory is required to take to address non-compliances identified during the audit.

Factory Audit Vs. Quality Inspection

Criteria	Factory Audit	Quality Inspection
Purpose	Conducted to assess the factory’s overall capability to produce goods	Performed to check the quality of the products produced by the factory
Scope	A comprehensive assessment of the factory’s entire manufacturing process, including production capacity, quality control procedures, equipment, and personnel	Focused on the inspection of finished goods only
Frequency	Typically conducted less frequently than a quality inspection. A factory audit may be performed once a year or less	May be conducted on every batch or shipment of products
Assessment Criteria	Based on a set of predetermined criteria that evaluate the factory’s overall performance, such as production capacity, quality control, and management systems	Based on specific criteria that evaluate the product’s quality, such as product specifications, packaging, labeling, and physical appearance
Outcome	A report that highlights the factory’s strengths, weaknesses, and areas for improvement	A report that indicates whether the products meet the specified quality standards or not

What Documentation is Typically Reviewed During a Factory Audit?

Quality control manuals: These manuals outline the company’s quality control procedures, such as inspections, testing, and documentation requirements.
Production records: These records provide a detailed account of the manufacturing process, including the materials used, production dates, and batch numbers.
Standard operating procedures (SOPs): SOPs outline the step-by-step instructions for each stage of the manufacturing process, including equipment usage and maintenance.
Training records: These records demonstrate that employees have received the necessary training and certification to operate equipment safely and follow proper procedures.
Safety documentation: This includes safety manuals, hazard communication plans, and incident reports, which demonstrate the company’s commitment to maintaining a safe work environment.
Certifications and permits: These documents demonstrate that the company has obtained all necessary certifications and permits to operate its facility and manufacture its products.
Environmental documentation: This includes documents such as environmental permits, waste management plans, and pollution prevention plans, which demonstrate the company’s compliance with environmental regulations.

What Steps Can a Factory Take to Prepare for a Successful Audit?

Preparing for a successful audit requires careful planning and attention to detail. Here are some steps a factory can take to prepare:

Know the Audit Requirements

Understand the audit requirements and ensure that the factory is in compliance with all relevant regulations, standards, and laws. This includes reviewing relevant documentation such as safety manuals, procedures, and records.

Conduct a Pre-Audit Assessment

Conduct a pre-audit assessment to identify any areas of non-compliance, potential risks, or weaknesses in the system. Address these issues before the audit to avoid negative findings.

Ensure Good Documentation Practices

Ensure that all relevant documentation is up to date, complete, and accurate. This includes records of training, safety procedures, maintenance schedules, and any other documentation required by the audit.

Train Employees

Ensure that all employees are trained and aware of the audit process, their roles, and their responsibilities. Provide training on safety procedures, documentation practices, and any other areas that are relevant to the audit.

Conduct Internal Audits

Conduct regular internal audits to identify any non-conformances and address them before the actual audit.

Assign a Point Person

Assign a point person who will be responsible for coordinating with the audit team, providing necessary information, and facilitating the audit process.

Maintain a Clean and Organized Facility

Ensure that the factory is clean and well-organized, with good lighting, clear signage, and proper waste disposal procedures. This will create a good impression and help the audit team focus on the audit rather than any distractions.

Be Transparent

Be transparent with the audit team and provide accurate and complete information. This will help build trust and credibility with the auditors.

Learn more about industry-related audits and inspections here:

When it comes to mass production, aside from factory audits before and during manufacturing, it’s also integral to conduct quality control. This process ensures the products delivered to clients and ultimately, to end-users, meet the International Standard Organization (ISO) requirements precisely. Learn more about QC here:

Types of Quality Control Tools

Another type of audit that is beneficial for both the factory and the brands looking to outsource their products is the Sedex Audit. Get to know more about it and its two types in the blog below:

Factory Audits in China – Sedex 4 Pillar Review and Explanation

Here at ODM, we provide training in Sedex Audit Processes as well as QC & factory audits. Here’s a peek and details of a Sedex training we attended in China.

All you need to know: Sedex Audit

To check if enterprises operate in an ethical, transparent and sustainable way, the amfori BSCI audit by the Foreign Trade Association (FTA) is conducted. This audit is valid for two years. See all details here:

What is a BSCI Audit for Promotional Products?

Read about factory visits in these blogs below:

Our team visited a plastic mould manufacturer in Vietnam that we partnered with before. Check out the blog below for everything we’ve learned about the company.

Factory Visit: How A Plastic Mould Manufacturer Produces Great Products?

As one of the largest coffee-producing countries in the world, Vietnam found another way to use its coffee beans and reduce its plastic use. Here’s a factory visit to a manufacturer of coffee bean products!

Factory Visit: Manufacturing Products from Coffee Bean Material

Take a look at the process of custom sign manufacturing from cutting raw materials to displaying the samples during our factory visit! We talked about it in the blog below:

China Factory Tour: Custom Sign Manufacturing

Cosmetics products are everywhere nowadays. Ever wonder about the packaging of these products? We visited an aluminium tube factory and you can learn more about it here:

China Factory Tour: Aluminum Tubes Cosmetics Packaging

To ensure top-notch quality products, ODM visited this PVS table mats factory and here’s the process of manufacturing them:

China Factory Tour: Manufacturing PVC Table Mats

To Sum It All Up,

Factory auditing is a crucial tool for companies looking to ensure that their supply chain operates in a responsible and sustainable manner. By conducting regular audits, companies can identify potential risks and issues within their supply chain, including unsafe working conditions, environmental violations, and non-compliance with labor laws.

Moreover, working with their suppliers to improve their operations allow companies can create a more stable and reliable supply chain that benefits everyone involved.

Why ODM?

At ODM, we understand the importance of reliability and commitment when it comes to being a procurement partner for businesses. We take pride in our ability to provide top-notch services and products to our clients, and we know that this is only possible through our partnerships with esteemed manufacturers.

By maintaining an active presence at our suppliers’ facilities through a factory audit, our team can stay informed about any issues that may arise and address them in a timely manner. This helps to ensure that our clients receive high-quality products that meet their specifications and requirements.

Factory Auditing FAQs

All you need to know about conducting factory audits!

What is a factory audit?

A factory audit is an evaluation process that aims to assess the overall quality, reliability, and compliance of a factory. This audit can be conducted by a third-party auditor or an internal auditor from the buyer's company. The primary purpose of a factory audit is to ensure that the factory meets the required standards and that the supplier has the necessary resources, processes, and systems to manufacture products that meet the buyer's specifications.

What are the different types of factory audits?

There are several different types of factory audits that can be conducted depending on the specific needs and requirements of the organization. Here are some common types of factory audits: Manufacturing audit, environmental audit, ethical audit, structural audit, C-TPAT audit, and food supplier audit.

What are the steps involved in conducting a factory audit?

Conducting a factory audit involves a thorough assessment of a manufacturing facility's processes, policies, and practices. The following are the steps involved in conducting a factory audit: Determining the audit scope, developing an audit checklist, scheduling the audit, conducting the audit, analyzing the results, providing recommendations, then audit follow up.

What documentation is typically reviewed during a factory audit?

During a factory audit, various types of documentation are typically reviewed to assess the quality and safety standards of the manufacturing process. Some of the common documents that may be reviewed during a factory audit include: Quality control manuals, production records, standard operating procedures, training records, safety documentation, certification and permits, and environmental documentation.

What steps can a factory take to prepare for a successful audit?

Preparing for a successful audit requires careful planning and attention to detail. Here are some steps a factory can take to prepare: Know the audit requirements, conduct a pre-audit assessment, ensure a good documentation process, train employees, conduct internal audits, assign a point person, maintain a clean and organized facility, and be transparent all the times.