Inspections, Detection, and Audits

1. Quality Control Inspections

Many of our tutorials have addressed control methods for quality. It is also important to address how companies determine quality in an objective way by enlisting outside organizations or independent departments within the organization to run inspections or perform audits (official and thorough inspections). Continuous improvement relies on different types of inspections to ensure ongoing enhancement of processes and products. The key difference between the methods described here and those discussed previously is that inspections and audits suggest an outside, objective party is involved, such as a contractor hired to do a fair assessment or a department within the organization that can operate independently. Inspections and audits will usually be delivered as a Quality Improvement Plan (QIP), a report of findings with “grades” and recommendations.

EXAMPLE

Hospitals and clinics will have regular inspections by state or civic units that provide licensure to operate. Because these inspections can be costly in terms of revenue and reputation, the healthcare provider is likely to have voluntary inspections done by other organizations before the mandatory inspections so they can solve any problems in advance. Similar inspections are involved across several industries, from daycare providers to restaurants.

First, let’s look at the different types of inspections and audits that can occur.

Pre-production inspections (PPI) occur before production begins. The quality of raw materials is inspected. This type of inspection can save a lot of time in the long run.

EXAMPLE

Suppose a company is making sweatshirts from recycled materials. They discover later that a lot of people find the shirts itchy and uncomfortable due to allergens in the materials. Had pre-inspection been done, it would’ve saved time and effort by identifying this issue before those items went into production.

During production inspection (DPI or DUPRO) is when checks are done mid-process. There is likely to be an initial production check of the first few items produced to verify the initial products meet quality standards.

Inline quality control (IQC) inspections are done at critical points in the process. For example, there might be checks after a component has been built, then another when the component has been welded to another part.

Sample checking is the process of choosing representative items to check for quality. This process involves identifying the total number of units to inspect, and which batch to inspect. The units from the lot will be randomly selected either using systematic sampling or stratified sampling. Systematic sampling refers to selection of units at regular intervals, such as every tenth item. Stratified sampling means dividing the lot into subgroups and sampling from each group to ensure representation.

The types of tests done for sample checking might include visual inspection, where the quality control person looks for visible defects such as scratches, dents, or incorrect color. Dimensional inspections refer to the measurement of critical dimensions to ensure they meet specified tolerances.

Functional testing means to ensure the product meets specifications and operates the way it is intended. Material testing means conducting tests to verify the properties of the product, such as strength, meet the specifications.

Gordon’s Bicycle Company uses a variety of inspection methods. They inspect the materials and pre-made components as they arrive.

They check the digital components before they are installed (IQC) and do sample checking and functional testing by taking every 100th bicycle for a ride with stress testing. Because Gordon is aware that his ownership of the company might skew his inspections, he uses a third-party auditing company to run these tests.

terms to know

Audit

Official and thorough inspections, often done by outside parties.

Quality Improvement Plan (QIP)

A report of findings following an audit, with “grades” and recommendations.

Pre-Production Inspections (PPI)

Initial inspections done before production begins, such as checking the materials and equipment.

During Production Inspection (DPI or DUPRO)

When checks are done mid-process. These may be intermittent or only done as each production cycle begins.

Inline Quality Control (IQC)

When inspections are done at critical points in the process. For example, there might be checks after a component has been built, then another when the component has been welded to another part.

Sample Checking

The process of choosing representative items to check for quality. This process involves identifying the total number of units to inspect, and which batch to inspect. The units from the lot will be randomly selected either using systematic sampling or stratified sampling.

Functional Testing

Ensuring the product meets specifications and operates the way it is intended.

Material Testing

Conducting tests to verify the properties of the product, such as strength, meet the specifications.

2. Supplier Site Inspections and Audits

Many companies will opt to perform supplier site inspections to reduce supply chain risk. The first reason for this is to ensure consistency in quality and ensure the raw materials and products meet the standards agreed upon by both companies. This also allows the organization to ensure the suppliers' manufacturing processes are capable of producing consistent quality.

Supplier site inspections can also ensure regulatory compliance, to ensure the supplier adheres to regulatory or ISO standards. Inspections can help manage a brand's reputation in quality and also factory and facility working conditions for workers.

EXAMPLE

Foxconn, the iPhone factory located in China, was found to have horrific working conditions, which created negative public relations for the company. In response, Apple increased the frequency and rigidity of audits at the factory and encourages the Fair Labor Association to conduct audits too (Labor News, 2023).

Ultimately, a supplier site inspection can provide risk mitigation for a company. By identifying potential issues through these inspections, they can identify and address potential quality issues and ensure the supply chain isn’t disrupted due to poor-quality products.

Many organizations will also perform supplier quality audits. A quality audit assists a company in identifying, preventing, and remedying problems in a supplier's process or product quality. Remember, the goal is to have strong partnerships with suppliers, so by working together, the two organizations can address any issues with the quality of raw materials or supplied goods.

3. Steps in an Audit

3a. Prepare for the Audit

The following steps are written for the team doing the audit, whether a company inspecting a supplier or an external organization hired to do an audit. Either way, an audit has six main steps: preparation and planning, conducting the audit, evaluation and analysis, reporting, follow-up and corrective actions, and continuous improvement. Let’s look at these steps in turn (QIMA, 2024).

First, a company must prepare for the audit. Remember, for continuous improvement, these audits should be performed systematically to ensure compliance with quality, regulatory, and contractual requirements. Here are the steps to take in the preparation and planning phase of an audit:

1. Define Objectives: Clearly outline the goals of the audit, such as verifying quality standards, assessing regulatory compliance, or evaluating process efficiency.
2. Select Audit Team: Assemble a team of qualified auditors with the necessary expertise and experience. This may include quality assurance specialists, engineers, and regulatory experts.
3. Develop Audit Plan: Create a detailed audit plan that includes the scope of the audit, specific areas to be examined, audit criteria, and a timeline.
4. Notify Company: Inform the company about the upcoming audit, providing them with the audit plan (such as schedule and access needed) and any specific requirements or documentation needed.

2b. Conduct the Audit

The next phase is to conduct the audit. Here are the usual steps that occur during the audit phase.

1. Opening Meeting: Hold an opening meeting with the company’s management and relevant personnel to introduce the audit team, review the audit plan, and discuss the objectives and scope of the audit.
2. Documentation Review: Examine the company’s documentation, including quality manuals, standard operating procedures (SOPs), work instructions, and previous audit reports.
3. On-Site Inspection: Conduct a physical inspection of the facilities. This includes observing production processes, inspecting equipment and machinery, and assessing the overall working environment.
4. Interviews: Interview key personnel, including managers, supervisors, and workers, to gather insights into their roles, responsibilities, and compliance with procedures.
5. Sample Testing: If applicable, collect samples of products or materials for testing to verify that they meet specified quality standards.

2c. Evaluation and Analysis

After the audit is conducted, the evaluation and analysis of the audit will occur. Here are the steps to take in that phase.

1. Compare Findings Against Criteria: Assess the company’s practices and processes against the audit criteria, which may include industry standards, regulatory requirements, and contractual obligations.
2. Identify Nonconformities: Document any deviations or nonconformities found during the audit. Classify these issues based on their severity and impact on product quality, safety, or compliance.
3. Root Cause Analysis: For identified nonconformities, perform a root cause analysis to determine the underlying reasons for the issues.

2d. Draft the Audit Report

The next step is to draft the audit report and provide specific recommendations. Just as it is at every phase, it is important to remember a strong relationship between the company and auditor is important, so the report should be approached as a collaborative, problem-solving effort.

1. Draft Audit Report: Compile the audit findings into a comprehensive report. This should include a summary of the audit, detailed observations, identified nonconformities, and any positive practices observed.
2. Recommendations: Provide specific recommendations for corrective actions and improvements. These should be practical, achievable, and aimed at addressing the root causes of identified issues.
3. Closing Meeting: Hold a closing meeting with the company to present the audit findings, discuss the identified nonconformities, and agree on a timeline for implementing corrective actions.

2e. Follow-Up and Correct Actions

1. Action Plan: Help the company develop a corrective action plan addressing the identified nonconformities. This plan should include specific actions, responsible persons, and deadlines.
2. Implementation: Monitor the company’s progress in implementing the corrective actions. This may involve regular communication, interim progress reports, and additional site visits if necessary.
3. Verification: Conduct a follow-up audit or verification activities to ensure that the corrective actions have been effectively implemented and that the issues have been resolved.

2f. Continuous Improvement

The final step, continuous improvement, involves the following:

1. Monitor Performance: Continuously monitor the company’s performance through regular audits, performance reviews, and feedback mechanisms.
2. Update Audit Criteria: Revise and update the audit criteria and processes based on lessons learned, changes in regulations, or evolving business needs.
3. Training and Support: Provide ongoing training and support to the company to help them improve their processes, quality systems, and compliance efforts.
4. Remember, the goal of an audit and inspections is to achieve continuous improvement, so products and services are of the highest quality.

3. Continuous Quality Improvement (CQI)

As you may recall, continuous improvement is the process that involves incremental (small) changes to systems, processes, and products to continually see better results. As you’ve learned in this tutorial, inspections and audits are two methods to determine causes of quality issues so they can be addressed. But, continuous improvement is an ongoing process.

Organizations, based on inspections, audits, observations, and customer feedback, will normally follow a continuous improvement process by following these steps:

1. Identify areas for improvement.
2. Define goals and objectives.
3. Develop an improvement plan.
4. Implement changes.
5. Monitor and measure.
6. Evaluate results.
7. Document and standardize processes.
8. Use a continuous feedback loop.
9. Ensure the culture supports continuous improvement.
10. Repeat the process—continuous improvement should not be “one and done” but instead focus on making small changes continuously.

REFERENCES

Labor News (2023, November 10). Investigation of an Apple Supplier: Chengdu Foxconn Report in 2023. China Labor Watch. chinalaborwatch.org/investigation-of-an-apple-supplier-chengdu-foxconn-report-in-2023/

QIMA (2024, July 3). How to conduct a supplier audit. QIMA. blog.qima.com/supplier-audits/how-to-conduct-a-supplier-audit