As companies look to diversify their supply chains, India is gaining popularity as a sourcing destination. However, sourcing from India carries risks due to numerous stories of fraudulent companies and suppliers pretending to be factories.
One effective method to mitigate these risks is conducting factory audits in India. This article will guide you through the fundamental elements of factory audits.
What Is a Factory Audit in India?
A factory audit is typically performed by an independent third-party inspection company. These companies employ well-trained and certified inspectors to conduct these services.
The core aim of conducting a factory audit is very different from a product inspection in India, because the purpose is to reduce the likelihood of receiving defective products and conducting business with unreliable suppliers. During the audit, the inspector evaluates whether the factory meets quality standards set by the client or regulatory bodies and multiple other criteria.
Why Are Factory Audits Important in India?
A good quality control practice is to audit every new supplier you’re dealing with and periodically audit your existing suppliers.
It helps you get an impartial view of the factory’s production processes and equipment, quality management systems, export license and other relevant information. By doing so, you can establish trust between you and your supplier, and it reduces the risks of receiving non-compliant products.
Incident: Identifying Fraud Issues in a Factory Audit
One recent incident HQTS auditors expected while auditing a factory in India was a fraud case. While upon arrival at the factory, the supplier appeared to have met all the requirements, with all cartons well-stacked and the visual count of cartons matching the packing list.
However, upon closer inspection, the inspector discovered that the cartons had been stacked on top of a table intended to create the illusion of a full shipment. In reality, the supplier had only completed the packaging for 37% of the products, despite them claiming that 80% had been completed.
This showcases the importance of using an impartial third-party inspection company to thoroughly audit the factory to detect any discrepancies.
Factory Audit Checklist in India
As for HQTS, each factory audit may look different depending on the product category and the client’s requirements. However, a factory audit in India generally includes more extensive checkpoints than a supplier audit.
General Checklist for Supplier Audits
- Legality information
- Bank information
- Human resources
- Exportation capability
- Order management
General Checklist for Factory Audits
- General information – factory ownership history, location, certificates, technical capability, etc.
- Infrastructure resources – surrounding infrastructure, production environment, etc.
- Production machinery and equipment – maintenance, quantity, usage, etc.
- Packaging/storage – labelling, packaging, and storage practices.
- Training/knowledge
- Quality control systems – documentation, processes for nonconforming products, and more.
Sample factory audit sample report from HQTS.
It is important to understand that these bulleted points are just an example of the extensive steps that an HQTS auditor would inspect during a factory audit. It’s worth noting that a factory audit is much more comprehensive than what is listed above. Click here to see free samples of our supplier and factory audits.
Conclusion: Factory Audits in India: Lessons Learned From Our Audits
Auditing your supplier’s factory in India is a great way to get a glance on whether the intended factory is capable of producing goods that meet your specifications.
With over 25 years of experience in product inspections and supplier audits, HQTS is a trusted partner for businesses looking to mitigate risks and ensure quality. We have a strong global network and can conduct audits across pan-India, including major cities such as Pune, Delhi, Mumbai, and Bangalore.
If you have any questions or concerns about auditing your Indian suppliers, our team is ready to assist you. Feel free to reach out to us directly today.
