Humans, Robots & Supply Chain Automation

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Humans, Robots & Supply Chain Automation

The rise of things like Blockchain, IoT (internet of things), cryptocurrencies and robots and automation have all been defining disruptors for the retail supply chain over the last few years.

How are supply chains across the globe currently being impacted by the rise of these disruptors?

Are human jobs at risk?

How can your business adapt to utilise these new technologies? 

Answers to all of these questions and more as we take a look into the ‘Four Industrial Revolution’ of modern-day commerce.

The State Of Automation And Its Role In The Retail Supply Chain

The Fourth Industrial Revolution and the emergence of big data, automation, robots and AI have created disruption in the supply chain for many retailers today.

While many retailers have been slow to adapt to the age of digitisation, they have adopted advanced software that has been able to provide them with operational efficiencies and increased data visibility. What I mean by this is that many retail brands have slowly shifted from the age-old manual entry excel spreadsheets to software that can provide accurate, real-time data that is visible to all of their supply chain stakeholders.

So this is where the majority of SME’s (Small, Medium Enterprises) find themselves. 

But…

A rapidly changing, technologically driven retail landscape means that each day an increasing number of robots and AI are integrating themselves into the global retail supply chain operations.

What Supply Chain Operations Are Integrating Robotics?

In understanding what supply chain operations global supply chains are currently integrating with robotics, you can start to imagine how you could begin to digitize your supply chain operations. So let’s dive in;

Warehousing Management – The introduction of robots and wearable technology has been introduced into warehouse management activities allowing for greater efficiencies, minimizing the likelihood of human error.

So what does this look like? 

Amazon is a prime example of automating some of their warehouse activities. They adopted the Kiva system which cost $775 million to put in place. This Kiva system is made of robots that place and stack products all over the warehouse, creating system efficiencies for Amazon as well as reducing overhead expenses. Warehouse management and the retail supply chain

Whilst this is a ghastly amount and likely very unaffordable if you are an SME (Small, Medium Enterprises), there are entry-level robots that are cheaper and can be used to create this kind of efficiency for your operations. The cheaper Baxter robot has an approximated lifespan of about three years and, costs approximately $25,000 is able to work over 2000 hours straight in a plastic factory.

This, as you know, is not a possibility within the human workforce as it is in violation with the social compliance standards as laid out by the SA8000. The level of production efficiencies that can be achieved through automated process are definitely worth your time in research.      

Inventory Management – In June 2016, Walmart began testing the use of drones for better inventory management. Walmart said that it could take up to a month for its inventory to be checked manually, but takes only 24 hours with the use of a drone. The drone flies around the warehouse, scans every items’ barcode, allows for real time data insight and is also able to quickly locate any misplaced items. This not only makes for an efficient inventory management system, but also a well managed warehouse.

The automation of the simpler routine warehouse and inventory systems such as stacking/moving stock around and labeling boxes as per specifications should free up your labour force to spend more time and resources into optimizing your supply chain and its operations for further enhancements and innovation. Robotics and automation should be seen as collaborative for more enhanced and optimised operating systems.   

 These are only two of the examples of where automated robots and technological advancements are currently being applied to supply chain activities, but they are certainly not the only areas that are being technologically transformed. 

Last year the world saw Amazon make the very first drone delivery, an exciting technological advancement in the area of delivery and transportation. This, however also indicates the rapid pace at which retail is moving and transforming.

In order for you to keep up with the likes of a global retailer like Amazon or Walmart, you will need to begin planning for the digitisation of your supply chain. 

So the big question then…

Are Robots And Automation Taking Human Jobs Away?

The number one question much of the retail labour force is asking “Will robots be taking away our human jobs?”

There is absolutely no doubt that with the rise of automated robots and AI that there will be a reduction in the number of labour needed in your retail supply chain;

The production line – Robots can work through the night, doing away with overtime, overworked and underpaid working conditions that often result in social compliance violations.

Automated robots improve the efficiency of the production line, they are able to produce products at a much faster rate than is ever achieved automation and bots in the retail supply chainthrough human labour.

Warehouse and inventory management – Stock can be moved around and stacked up accordingly, inventory can be managed through the flight of a drone with real-time data updates and the ability to trace misplaced inventory. This all helps to create an optimised warehouse and provides near perfect insight into inventory enabling, better stock control and demand forecasting.  

While at this point you may think that I have painted the picture of a robotic, automated retail supply chain, this is not true.

Human labour is still very much needed.

Let me tell you why.

1. Production and supply chain automation is expensive. The initial start up costs may be too much for many smaller retail brands.

2. Robots will need maintenance and calibration – This may require additional training for your current labour force, but this should also be seen as an opportunity in the market for the employment of a higher skilled labour force.

Humans are necessary for the running of your supply chain. “No matter how well encoded your robots are, technology is not advanced enough for the appropriation of human judgment.”  

According to Brandon White of Kenco, “The best solution to introducing AI innovation into the supply chain is a “hybrid” of humans and AI technology working alongside one another.” Adopt an optimistic perspective – robots and automation should enhance productivity and efficiency.

How?

Collaboration. Collaboration with machinery is absolutely necessary to create an efficient technologically advanced supply chain.  

Key Takeaways

So, while robots and AI certainly have a place in the supply chain, humans are still essential for every aspect of the supply chain. However, the current jobs of your existing labour force will have to change to accomodate the age of technology and the efficiencies that it presents.

You will essentially need a higher skilled workforce to work in collaboration with the automation technology that you seek to adopt. You will need people who can calibrate and code higher tech machinery, and you will also need more leadership and HR roles.

You may or may not be feeling the pressure to adopt AI automation into your supply chain, but the reality is, it’s on the horizon. Your customer demands more of you and more of your supply chain. The question is, what are you doing to meet their demands? As we move into the future, your comfort zone may need to be left behind.

Let us know in the comments section how automation, robotics or AI have affected your supply chain. 

avoid unnecessary supply chain complexities with our guide to preventive quality management

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Case Study: CQI (Continuous Quality Improvement) Strategy

A CQI strategy should be adopted to provide you with a road map toward improvement of your supply chain activities. It should be designed in such a way that takes your retail brand through the process of data collection, data analysis and a continuous cycle of monitoring of activities for efficiency.In this blog post, we take a look at one of our very own retailers that experienced various supply chain complications, and what we did to help them implement an effective CQI plan that would ultimately reduce their expenses and optimise their quality systems.

A continuous quality improvement Case Study

A well known European sourcing company kept finding that 60% or more of their inspection reports failed or were declared pending. As a quality director you will know that a high pending rating slows down your decision making process and directly affects productivity rates. It was at this point the retailer decided to review the problem in a lot more detail; through the services of a third-party quality provider – API.

So, what was API’s approach?

  • We needed to quantify the difficulties that they experienced. We went and recorded all of their product defects and fail or pending reasons for their products. Our inspectors capture all available data which is then entered directly into API’s data capture system. This process allows for data analysis to be done across all inspections or per category/ supplier.CQI

What was the problem?

One of the top reasons for pending products was a discrepancy in information that was found on the shipping mark compared to that of the product specifications.

But, why were these problems experienced?

The retailer had three different coding systems, which made it difficult for the supplier and they often mixed these numbers up.

API was able to find this problem through various stages of data collection and analysis.  API then presented their finding to the management team where it was discussed how to deal with these different coding systems, and what kinds of things should be present on the shipping mark in order to minimise their current supplier confusion.

What solution was implemented?

API was able to identify an opportunity for improvement within the rules and guidelines of the retailer, and the documents were modified to help minimise their suppliers’ confusion. An opportunity was also identified to update the supplier manual to be inclusive of these new modifications, which then needed to be re-distributed to all of the existing suppliers.

As a part of the continuous quality improvement plan it was strongly suggested to consistently monitor the company’s passing, fail and pending rates in order to effectively evaluate levels of improvement as a direct result of the implementation of the plan suggested by API.

What were the results of implementing this CQI plan?

The retailer experienced great success by implementing this solution. They experienced a passing rate that remained mostly over 80% even during peak season. 

 

CQI graph

After the improvement suggestions were implemented it helped this retailer to significantly reduce their pending and failure rates. In a situation like this, it’s important to note that even though the problem was not directly related to manufacturing, it still required both the quality and merchandising team to implement the changes as suggested by API.

 

Key Takeaways

Implementing a a continuous quality improvement strategy for your retail brand is essential for production, quality and management effectiveness – without it you will be firefighting problems all along the way. As a part of your strategy you need to be answering these five questions – if you aren’t go back and make sure that you do:

How did your CQI strategy improve;

       1.  Your organisational effectiveness?
       2. Your level of customer satisfaction?
       3. Your levels of compliance?
       4. Your organisational culture?
       5. Your organisation’s documentation?

If you cannot answer those questions definitively you may need to reevaluate your strategy to be more inclusive of addressing them.

Let us know in the comments section below about how you have gone about improving your own quality systems

Ready to begin tackling preventive quality management?

check out our preventive quality management guide to get you started

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Put In Place A CQI Strategy For The Festive Season

The festive season is fast approaching and retail stores the world over are seeing an influx of people coming through their doors to purchase essential and luxury items. This time of the year is a very busy (and lucrative) time for most retail businesses, but it also presents an increase in supply chain pressure and demand that can lead to unsatisfied customers if quality becomes an issue.

Quality should most certainly not be a seasonal prerequisite for your brand.

It’s of vital importance that you have a continuous quality improvement (CQI) strategy in place to ensure you have a road map for success to ensure that you deliver, even more so when your supply chain pressure is on.

In this blog post, we look at why you need an improvement strategy, and we will also touch on the seven quality management principles and how they serve as the path to better quality for you, all year round!

Why You Need A CQI Plan For Your Retail Brand;

A CQI plan is meant to form a road map to improving your production activities, which will positively impact your production outputs. It should be designed to take your retail brand through the process of monitoring, data collection and analysis as a part of your daily activities.  

So what Tools Are Commonly Used for improved quality processes?

These tools are not used in isolation of one another, and a lot of the time the tool you choose to select will be situation specific, so you may use a combination of the below mentioned tools;

  • Check Lists – This will need to be prepared ahead of time, and you should look at creating a template and update it regularly. It should be used to collect and analyse all kinds of data relating to your production procedures and operating systems.
  • Brainstorming – This enables a creative environment where ideas are shared in a large group. The key here is to ensure there is no judgment as this will hinder the creative process. The point is to uncover any hindrances to your production process, aCQI strategy and the quality management principles nd this tool should be inclusive of all levels of employees for creative and productive inputs.
  • Benchmarking – Oftentimes benchmarking against industry standards such as ISO 9001 is used in order to compare how your quality systems are lining up accordingly. You need not only benchmark against an industry standard, but if you wanted to you may also benchmark against your competitors.  
  • Root-Cause Analysis –  This is a continuous improvement strategy that is often adopted to get to the root cause of a problem and seeks to permanently eliminate that problem from ever recurring again. There are a number of techniques that can be used as a part of your RCA strategy, and it will be up to your unique situation as to what tool you select.

These tools are only a few of what’s in the arsenal of techniques that can be used to implement a sound improvement plan. You need not only select one tool, you can mix and match to ensure that you find what works best for you.

The 7 quality management principles integral to your CQI plan;

If you are successfully adopting a quality management system, which I shall be bold enough to say that you should be, then you will know that an improvement approach is integrated into each principle of the most popularly used Quality Management System – ISO 9001. So let’s dive into what these principles are;

QMP 1 – Customer focus; How well are you meeting and exceeding your customer’s expectations? Your brand will need to work towards sustained confidence from your customer base

QMP 2 –  Leadership; The creation of unity and purpose with the engagement of employees at all levels will be crucial to how well you are able to align your strategy, quality policies, and production processes to achieve quality objectives.

QMP 3 – Engagement of people; By involving all people at all levels of your organisation you will create opportunities to effectively and efficiently achieve your quality and production objectives.

A CQI strategy for Improved product quality

QMP 4 – Process approach; A consistent approach to your organisation’s interconnected systems and operations produces a set of production results; in understanding how your production results are achieved you are then able to optimise your systems accordingly, ultimately improving your production performance.

QMP 5 – Improvement; Continuous improvement is essential for your organisation to maintain exceptional levels of performance. An improvement focus and strategy allows you to react to changes more efficiently.

QMP 6 – Evidence-based decision making; Decision-making should always be based on evidence and data analysis, this approach is more likely to produce your desired results and outcomes.  

QMP 7 – Relationship management; Successful production of your household goods can often come down to the way in which you manage your relationship with your supplier. Let it be open, communicative and collaborative. This approach has had more success when it comes to that increase in retail supply chain pressures.

These principles are the underpinning guidelines of the ISO quality management systems. When applied correctly they are able to take you towards that continuous performance improvement approach for your entire supply chain.  

The Benefits of Adopting A CQI for your Retail Brand

There are a number of benefits of adopting a continuous quality improvement strategy for your retail brand, ones that should not be ignored if you are to remain a competitor in the retail marketplace.

  • Reducing the number of quality errors – It will help you analyse available data, identify any areas for improvement, or any already existing production problems which will in turn reduce the number of quality errors that arise in your supply chain.
  • You increase your supply chain adaptability – It will ensure that when problems are identified your supply chain knows and understands the changes it needs to make in order to optimise for supply chain efficiencies.
  • Increased productivity – It will enable you to identify existing or potential problem areas within your supply chain, and once identified, you will be able to implement the solution which will increase your productivity outputs.

Key Takeaways

As the festive season has arrived and retail pressures are beginning to surmount to what seems like you will never get through it, rest on knowing that everything you have implemented up until now will work in your favour.

Your own continuous quality improvement strategy should include;

  • A variety of tools and techniques; such as brainstorming and checklists
  • You will also need to intimately understand the 7 quality management principles if you are to implement a successful strategy
  • If you are questioning why, don’t; there are production and quality benefits as well as those much needed bottom line benefits.

If you have not implemented a continuous quality improvement strategy before enlist the above knowledge in order to implement the appropriate quality management steps needed to ensure that only quality products reach your consumer; product defects and recalls are every retailers nightmare, with over 2000 children’s toys declared unsafe in the EU in 2016, but a successful strategy will make sure that Santa pays you a visit too.

What continuous quality improvement strategies have you implemented in the past that have proved full proof especially as we enter into the festive season?

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OPTIMISED QA SYSTEMS?

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Why Every Company Should Use Environmental Auditing

Manufacturing in the 21st Century has brought about some ugly truths about the way in which many retail brands produced their products, from the amount of CO2 emissions released to the way in which manufacturers dispose of waste. Today, environmental auditing is not a mandatory practice for retail brands, so is it even necessary? 

At API, we believe that ethical brands are the most perfectly positioned to meet the increasing demands of consciously aware consumers today.

Your brand’s social and environmental standings plays a bigger part in the heart’s of consumers the world over than ever before. We have created a visual guide that takes you through:

  • What an environmental audit is
  • Why you should adopt an EMS
  • Complying with ISO 14001
  • Types and scope of environmental audits
  • Essential pre-audit/post audit activities 
  • Key benefits for your brand 

 See why an environmental quality audit is essential for your brand below:

environmental auditing

So Why does your brand need an environmental audit?

  • It ensures legislative compliance
  • It reduces your environmental impact.
  • It reduces your water and energy usage
  • It has positive implications for your brands image and your bottom line

An audit such as this will have long term benefits for your retail brand as well as ensuring a competitive place in the market.

 Click below for more on how you can get started with your audit today! 

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2 Root Cause Analysis Techniques To Improve Quality

As a Root Cause Analysis (RCA) is a continuous improvement strategy used to identify the drivers of a problem, it serves the purpose of eliminating that problem from ever recurring again! But, how is this achieved? There are a number of RCA strategies that technical auditors can adopt to identify and eliminate the problem. In this blog post, I seek to take you through a tried and tested technique that many organisations adopt. So let’s dive in; Getting to the ‘root’ of the problem It is important to note that a root cause analysis should not be a once off thing that you implement in the odd major defective production case. You should have a Risk Assessment/Risk Management strategy that integrates RCA to exactly how you will diagnose non-conformities in your production process and handle your resolution process. 2 Root Cause Analysis Techniques for an improved quality audit The premise of every RCA can be defined as this;
  • Problem Recognition and Definition – You will need to acknowledge and define what your retail production problem is.
  • Identify the causes – You will need to go through the process of cause identification. The trick here is not to spend too much time brainstorming or mind mapping; this needn’t be a time-consuming aspect of the RCA.
  • Identify solutions – This step is based on your cause identification. In this step, you will need to identify the best possible solutions to addressing the problem so that it does not happen again.
  • Implement the solutions -If your products quality were compromised on the production line, you would need to begin implementing the solutions that you were able to identify in the previous step to prevent any future occurrences of this. The solution that you select needs to be one that optimizes and betters your operational processes. If the proposed solution does not accomplish this, you may need to repeat the above steps to ensure you come up with something that will.
An RCA should not be a time-consuming strategy. What it does need to do, is highlight the problems and make room for process optimisation.

So Who Conducts A Root Cause Analysis?

In a nutshell, the above is how an RCA would be performed, but who conducts them? This is a good question, especially if you are outsourcing your quality audit solutions to a certified third-party organization. Usually, your RCA is performed internally. Your factory manager can go for RCA training or a third-party organisation like API can deploy a trained quality auditor who will be able to assist you as you go through the RCA process. Can RCA’s Improve Quality Performance Results? Yes, they can improve your audit results, as your organisation is taking the onus to identify a recurring problem, analyse that problem to ultimately eliminate that problem, thus creating an improvement culture for your brand. The primary benefits of an RCA can have for your organization include this;
  • It provides a learning process to better understand the cause and effect of various solutions.
  • It provides a logical approach to solving your production problems through already existing data.
  • It can reduce your risk.
  • It will prevent recurring problems.
  • It will improve overall production performance.
  • It will leads to more robust quality management systems.
Through RCA an diagnostic you will be able to instil a continuous improvement system for your organization, where you will be able to reap the benefits of a well run production line. Let’s take a look at two popular RCA techniques and how you can go about performing them for any production problems that you may be facing.

The 8 Disciplines Problem Solving Technique

This problem-solving technique is used to identify the root causes of potential problems or nonconformities in your production process. It was developed and used primarily by the Ford Motor Company in the 1980’s for the above reasons; to identify and solve recurring production problems. This technique is not just for the automotive industry, but has proved itself useful for a diversity of industries. Many quality auditors undergo training to enable them to perform problem-solving techniques such as the 8D. The 8D technique is mainly focused on areas like safety equipment, factory procedures, factory flow, out-of-spec parts, logistics and any other concerns that may be a danger to workers. Let’s dive into how you can perform this technique; Defining the 8D Technique **Scenario – 2700 chairs were recalled last year because of fall hazards that were due to the breaking or bending of the leg. The CPSC found that structural frame of the upholstery chairs was missing a support block to the leg, which was against the original design specs. As I am sure you are aware – this is quite a problem, one I am sure your brand does not want to repeat. So let’s go into how you can adopt the 8D technique to solving a production problem such as the above; Create a team – You will need to establish a team with the appropriate the product and process knowledge. So this may be anyone who was in the factory, or even the QC manager as he may not have relayed the product specs correctly? Describe the problem – With your team you will now need to describe the problem in as much detail as possible using the who, what, where, when, why, how, and how many questions. These questions will enable your team to quantify the potential problem at hand. We know that 2700 chairs were recalled, you now will begin to uncover the reasons behind this. Implement and verify containment action – Once you have described and identified the problem you will need to contain those problems. How will your organisation prevent a massive recall like this in the future? Identify the root cause – Now you will need to identify all potential causes of the problem and question why it was not identified earlier. This process will come up with more than one cause, and each will need to be proved through some thorough brainstorming. Formulate and verify corrective actions – Based on the above findings you will need to define and implement the appropriate corrective actions.  2 Root Cause Analysis Techniques for an improved quality audit - Risk assessment for an improved quality audit Correct the problem and confirm the effects –  Based on the findings of the above steps, you will need to ensure that the cause of the problem is removed and you will then need to supervise the effects this may have on your future production process. Prevent the problem from recurring – As the 8D technique is a continuous improvement technique, you may need to revisit and amend the management systems and/or operating systems, practices, and procedures to be sure that your root cause has been removed and the problem will not recur. Congratulate the team – This is an important step as your team will have spent a lot of time reflecting and analysing each production step to the benefit of your brand. Acknowledge and recognise them for their efforts and thank them individually.

The Five “Whys” Technique

This problem solving technique is simpler in its approach and you may find that you need to adopt a more structured technique for more complex situations. In saying that, there are many organisations that adopt this technique for the above reason, as it is simpler and maybe less time consuming than others. This problem solving technique was devised in the 1930’s by Sakichi Toyoda, the founder of Toyota Motor Corporation, where it gained its popularity in the 1970’s helping to solve common production problems. This techniques is designed to ask “Why” five times. If we take an example such as this;  “We cannot assemble this product”.  Then a trained quality auditor would ask: Why? One part is too long or too short Why? The machine that cuts this part works inconsistently Why? One adjustment is loose Why? A lock nut is missing Why? The maintenance manual does not mention this lock nut In its simplest form we would have identified that the problem lies within the instruction manual – The manual can then be updated to include the problem of the lock nut.

Key Takeaways

Production problems are a struggle, but there are many ways in which these struggles can be avoided and prevent potentially costly recalls for your brand. In this post, we looked commonly used problem-solving techniques that will ensure a smoother production process for your retail brand. These root cause analysis techniques are designed to incorporate a full team approach to identifying the root-causes of any production problem you may be facing, and successfully eliminating them together to achieve greater production success.
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A Factory Quality Audit Checklist To Assess Your Suppliers

Household goods manufacturing and supply chain operations are often vulnerable to compliance and regulation violations. With the pace at which the many complex parts of a supply chain can move, it’s no wonder that retailers who trust too willingly in their suppliers can land up in hot water when things don’t go according to plan. The only way to address these challenges head on is by conducting a quality audit. Discover our factory quality audit checklist that touches on quality management, social and environmental compliance here. An audit of your supplier’s factory is conducted to ensure that your supplier and their factory’s operations are able to produce your product to your expected levels of quality, as well as ensure compliance in your product’s destination market. This is not the only reason though… Carrying out audits also help to assess the risks that may be present with a particular supplier and provide direction on how you can go about managing that risk. Ultimately, the decision to work with a particularly supplier will be up to you, but your decision will at least be based on a trusted risk assessment with a presented improvement strategy. Our checklist takes you through a what a brief assessment of your supplier’s quality systems would/should look like. We will cover 3 main sections in this checklist:
  1. Quality Assurance & Technical Questions
  2. Social / Health & Safety Questions
  3. Environmental Audit Questions

How Does A Quality Audit Grading System work?

For each checkpoint, the following guideline should be used; N/A – Checkpoint not available or not evaluated. 0 – Major non-conformity – absence of procedure or proof of big discrepancies in implementation – a corrective action will be designed for this checkpoint. 1 – Minor non-conformity –  incomplete procedure or proof of discrepancies in implementation – a corrective action will be designed for this checkpoint. 2 – Acceptable –  procedures are available and implementation is acceptable, however opportunities for improvement exist – an opportunity for improvement can be designed for this checkpoint. 3 – Good – procedure and implementation acceptable, no opportunity for improvement identified. 4 – Best Practice – factory has designed and implemented best practice of industry.

Quality Assurance & Technical Questions

a factory quality audit checklist 1WHAT TO LOOK OUT FOR:
  • Quality manual and all procedures show revision control (sign-offs & dates), history of changes
  • Product quality yield data, problems and corresponding improvement actions, status of preventive/ corrective/audit results
  • Strategic and tactical objectives, goals, action plans, etc.
  • Analysis of field failures, inspection yields, resource needs, internal audit results, corrective action status, etc.
  • Management review meetings, goal setting, performance measurement, internal audits, action plans, customer surveys
  • Employee involvement/recognition program, Lean, Six Sigma, kaizen, SPC, 5-S, cost reduction programme
  • Corrective actions, trend charts, meeting minutes, non-conformance frequency & cost analysis
  • Management review meetings and corrective actions
  • Look for use of training aids and work instructions at work stations
  • Qualification records, certification history
  • Records of testing, production quality records, audit records, interview workers to validate training records
  • Job descriptions, job skills assessment, training records, training manuals

What if my quality assurance score is below standard?

API is able to customize its QA solutions based on your specific needs and requirements. API will provide the supplier information on how they can go about improving various things within a factory. This information will be relayed back you, the retailer, where you will gain insight into your potential supplier and their factory operations to ensure compliance across the board.

SOCIAL / HEALTH & SAFETY QUESTIONS

A factory quality audit checklist 2

What to look out for:

  • Procedure for training and communication and participation
  • Emergency preparedness and response plan, monitoring and performance measurements
  • Policies and procedures, health and safety trend charts, accident rate improvement history
  • Safety committee or group meeting minutes, accident investigation reports, safety audit reports
The social audit assesses the social systems and structures that your supplier has in place and is normally based on the standards as laid out by the SA8000. As a professional third party auditing company, API is able to provide their industry expertise and long time experience to aid you in achieving your social compliance certification.

Environmental Audit Questions

a factory quality audit checklist 3

What to look out for:

  • Environmental policy statement document
  • Records of agency/government inspection, procedures for measuring and monitoring environmentally sensitive activities
  • Record of purchases, waste stream and consumption; inventory control procedures
  • Records/use of; non-hazardous (RoHS/WEEE compliant) materials in production, biodegradable materials, returnable containers or packaging, recycling program, packaging materials made of recycled materials

Key Takeaways

A factory quality audit checklist allows you insight into your suppliers quality control processes and manufacturing capabilities, their strengths and weaknesses. This empowers you to strengthen those weaker processes where needed. A quality audit checklist will help ensure:
  • your factory’s quality systems are up to date, organized and well recorded.
  • confidence in the selection of your supplier based on checklist insights.
  • confidence in the quality of the product that is manufactured.
  • confidence that compliance standards are actively being met by your supplier.
This approach allows you to build a more collaborative relationship with your supplier, where you supplier has a more invested approach to your brand and its product. It helps to ensure top class quality systems and a mutually beneficial relationship between supplier and retailer.
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3 Types of Factory Quality Audits Your Retail Brand Needs

Many retail brands today are littered with non-compliance, human rights and environmental violations. These organisations find themselves at a loss on how to handle this kind of supply chain complexity risk. So, how can your brand prevent all of this? Factory quality audits. These quality audits aim to identify, eliminate and reduce supply chain risks for your retail brand. They also offer continuous improvement strategies to allow for constant growth, awareness and a strategic competitive position in the marketplace. In this blog post, we explore the different kinds of quality audits that third-party quality providers can offer you, so let’s dive into what each audit can provide you with and what the benefits will be for your brand.

Technical Audit

Let’s begin by defining what a technical audit of a factory is; This is the process of evaluating and assessing your factory’s technical capabilities; whether or not they have a quality manual with all its quality systems defined from organizational structure to assessing whether or not a factory has any internal audit and inspection procedures. This audit will also assess the factory’s layout and whether or not there is scheduled regular maintenance and calibration of machinery. This audit is typically based on the guidelines of ISO 9001: 2015, which is an internationally recognised standard to ensure an efficient quality management system (QMS) of your chosen factory. The latest update has meant that the standard is more performance focused, and this is done by merging a process-based approach with risk-based thinking and adopting the Plan-Do-Check-Act cycle. ISO 9001 - Techincal Quality Audit According to the guidelines as laid out by ISO 9001:2015, they are roughly categorized into eight sections; five of which are mandatory for the QMS of your factory;
  • Requirements for a quality management system
  • Management responsibility
  • Resource Management
  • Product Realization
  • Measurement, analysis, and improvement of your QMS
Clauses one to three are not requirements, but are informative about the scope of this standard references to help understand the standard better, and terms and definitions that you may need to aid in the adoption of this QMS. What are the objectives of a technical audit? The objectives of hiring a third-party auditor to assess the quality management systems of your factory would be this;
  • To assess whether there is an effective and efficient QMS of the factory.
  • To assess whether or not this factory is able to meet your production requirements.
  • This audit will assess the potential risks you may be aligning yourself with.

Social Audit

The SA8000 was established by the Social Accountability International in 1997. Over time this standard has become a reliable framework that many retail brands and organisations adopt to eliminate human rights violations from their supply chains. Looking back at the sweatshop claims against Mattel in 2011 for its use of child and forced labour, not to mention illegal amounts of overtime that were agreed to under the table, these horrific situation still need to continuously be eliminated from today’s retail supply chains. Social quality audit The SA8000 framework can measure the social performance of an organisation in eight different areas; this is rooted by the management system element that can drive continuous improvement in all areas. This standard is valued for its meticulous approach to achieving certain levels of social compliance. The 9 SA8000 social compliance requirements are:
  • Child labour – No children younger than 15 years of age may be employed by any factory, as we can tell in the case of the above factory, this was not the case.
  • Forced labour – No person may be employed by a factory if they haven’t offered to do so voluntarily.
  • Health and safety – A safe and healthy workplace environment must be provided by the factory, who should also prevent any potential health and safety incidents and work related injury or illness from occurring. You would need to ensure that there is sufficient personal protective equipment (PPE) within hard-labouring factories.
  • Freedom of association and collective bargaining – All staff have the right to form, join and organize trade unions and to bargain collectively on their behalf.
  • Discrimination – A factory is prohibited from engaging in discrimination in hiring, remuneration, access to training, promotion, termination or retirement.
  • Disciplinary practices – A factory is prohibited from engaging in or tolerating the use of corporal punishment, mental or physical coercion or verbal abuse of employees.
  • Working hours – A factory must comply with applicable laws, collective bargaining agreements and industry standards on working hours, breaks and public holidays.
  • Remuneration – The right of staff to a living wage must be respected by the factory.
  • Management systems – Compliance must be reviewed and implemented to the SA8000 standard through developed policies and procedures.
If child labour is found within your supply chain, it results in an immediate audit failure! You need to ensure that your supplier complies with the requirements of SA8000 so that you can eliminate potential areas of risk that may be present in your supply chain. Once you receive your audit report, based on the findings, your supplier will have time to rectify any mishappenings, and this will then usually result in unannounced visits to assess whether any improvements have taken place. Key Benefits of a social compliance audit for your retail brand
  • Compliance according to the SA8000 framework will prove that your brand is committed to social accountability; from treating your employees fairly to ensuring compliance with minimum wage requirements.
  • It will by nature continuously improve the efficiency of your supply chain.
  • If your organization aims to operate internationally, this standard will stand you in good stead for any international tender.
  • This standard will ensure that you are globally compliant and that you reduce and manage risks accordingly.
  • This standard will also provide brand protection for your organization.

Environmental Audit

An environmental audit will assess whether or not your factory complies with environmental regulations; this will often be based on the ISO 14001: 2015 standards which are an internationally recognised family of standards. I want to go back to the above factory that was producing toys for Mattel; in the undercover investigation it was found that hazardous chemical products were used in the production process, but factory workers were told to hide them when auditors came in. Environmental quality audit There are many concerns with regards to a situation as the above 1. The chemical usage in the toys would likely not have met international regulation. 2. Hiding violations from an auditor only aids non-compliance and illegal production processes. 3. How are these chemicals affecting factory workers? How are they stored? How are they disposed of? The environmental audit procedure seeks to uncover the above issues, with the ultimate goal of eliminating those kinds of violations and ensuring a clean and well-managed supply chain. An environmental audit such as ISO 14001:2015 will assess the following;
  • The legal requirements according to the substances that are being used which would along with risk assessment document.
  • An audit would assess whether the factory has an existing Environmental Management System (EMS) in place.
  • An audit would assess the solid and hazardous waste situation of the factory and whether or not they have an appropriate procedure in place for the disposal of waste.
  • An environmental audit would assess waste water disposal, how and where you are disposing this waste water, this is often paired with waste water testing to know what kinds of chemicals are present that could potentially be damaging to nearby water canals.
  • An audit will also assess the CO2 emissions of your supplier’s factory.
  • An audit will assess the amount of energy and water that your supplier’s factory uses.
See the checklist we created on the types of questions an auditor may ask when visiting a factory. This would be coupled with the observation skills that a professional auditor would possess. **TIP – The above audits assess your factory’s current operating procedures. It must be said that it is not uncommon to find a factory that complies with everything we have mentioned up until now. The key is to understand that these audits aim to highlight any major risks, but that upon receiving your audit report you will also receive continuous improvement suggestions, to aid your factory in achieving compliance and an excellent social and environmental rating.   So you may be thinking, that’s great I know what they will assess, but what are the felt benefits of an Environmental Audit? Good question, let me tell you why you need an Environmental Audit;
  1. It ensures compliance with international regulation.
  2. It encourages better environmental performance of suppliers.
  3. It reduces environmental impact.
  4. It reduces costs through a lower environmental impact.
  5. It provides a strategic competitive advantage for your brand.
So I pose the question to you – are you ready for an environmental audit?

Conclusion

Retailers today often only consider one or two of the above quality audits, but as consumer behaviour has shifted, you may want to consider being certified according to all three international standards. This would ensure that your organization achieves a strong competitive position in the marketplace. So let’s take a quick re-look at the benefits these can have for your brand;
  1. These audits will ensure compliance to international regulation
  2. These audits will provide a continuous improvement strategy for your supplier.
  3. These audits will ensure a well organized quality management system for your supplier.
  4. These audits will reduce your costs.
  5. These audits will strategically position you in the marketplace.
The insights of the above quality audits should provide you with enough information to decide on how you should manage specific supply chain risks. These audits aim to eliminate many of the common supply chain violations found and ensure the optimisation of your quality systems.

dive into our visual guide to show you why your retail brand needs environmental auditing today!

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What Are The Common Reasons For Quality Audit Failure?

Unethical or morally gray manufacturing practices are not uncommon for many factories across the globe, most commonly situated in third world or developing countries, for their cheaper manufacturing options. The figures, from the UN’s International Labour Organisation (ILO) and the Walk Free Foundation, show 24.9 million people across the world were trapped in forced labour for 2016. These cheaper conditions translate into unregulated conditions with little to no regulation and monitoring of working conditions, most of them horrific. These situations have lead to an increase in monitoring and auditing solutions to try and regulate the some of the terrible working conditions that many retail brands have been susceptible to over the years. Despite this, there are still many that fail to meet certain international standards and regulations put forth, making it absolutely necessary to know just what you need to avoid! In this blog post, we dive into some of the most common reasons that households goods suppliers fail their quality audits and what you can do to make sure your retail brand doesn’t fall into this pool.

Technical Failures

A technical audit is used to evaluate and assess a factory’s existing quality systems from policies and organizational structures, to the defined roles and responsibilities of the factory’s staff. So what are some of those common reasons a supplier may fail their technical audit? Disorganised documentation – As mentioned above, your supplier’s quality policies, records, reports and all documentation will be reviewed. Many factories often run on outdated systems like old excel spreadsheets, which opens your brand up to human error and potential risks that can be avoided. Without adequate reporting procedures or quality policies, the likelihood that your production requirements will be met, according to specification and in compliance with its destination market, will often not be the case if you choose to work with a supplier that has undefined and disorganized systems. Calibration and Upkeep of Machinery and Equipment – Many factories are dotted between third world and developing countries. There is a reason why Europe and U.S.A prefer to source abroad. It is often a lot cheaper than what they can find within their own borders, but that does not come without its own set of challenges.   Calibration of machinery in quality audit Many factories struggle with resources and finances, which means their money will often go into sourcing raw materials for the next production before putting money into the servicing of their machinery and equipment. This will mean that when an auditor comes to inspect the factory and its layout that the machinery is often out of calibration or filled with too much oil, which can contaminate your product and potentially places your brand in a risky position. Not ideal.

Social Failures

A social audit assesses the social systems and structures that your supplier has in place. Social compliance audits are always in line with the standards as laid out by SA8000; Child labour – Many social audit failures arise from being socially non-compliant with child labour causing an immediate “zero tolerance” failure. This is a serious violSocial Compliance in a quality auditation. If this is discovered during your audit process, it is recommended to rather find a different supplier. There are no grounds where this is acceptable. Hazardous working conditions – Hazardous and unsafe working conditions are not unheard of in many third world factory’s across the globe and are often the cause of factory technical audit failure. Things like faulty Personal Protective Equipment (PPE), expired fire extinguishers, no clearly marked exit signs, exits not in working order, machinery that is in need of calibration or lack of safety gear found on heavy machinery can lead to audit failure. These safety violations are easy enough for your supplier to address and solve, so bear this in mind upon receiving audit results as you will often need to factor in corrective time for your supplier. Panasonic and Sony have been caught in supply chain scandals, which have created immense amounts of bad media coverage for the global electronic brands. They have been accused of unfair labor practices in factories, vastly underpaid staff and electrical components that are said to be sourced from parts of the world known to be inclusive of child slave labour.

Environmental Failures  

With regards to ISO 14001, while it’s not a mandatory compliance standard, it is a little more complex to navigate because of this. But as the rules of engagement in retail have shifted into the hands of the consumer, retail brands are forced to rethink the application of this standard within their supply chain. Consumers today, are interested in reducing their environmental impact on the planet and your brand should help them do just that. How you ask? By complying with the guidelines of ISO 14001:15 – In saying that what are some of the common reasons many factories fail environmental audits? Incorrect methods of waste storage or disposal – This is often a problem as many factories do not have the capability or facility to dispose of their waste correctly. If your factory disposes fumes into the atmosphere or disposes untreated water into sewerage systems, it is considered to be an environmental risk and grounds for audit failure. Often a certified third-party waste disposal company will need to come and collect your waste to ensure that is disposed of correctly; your supplier can receive certificates, stating correct disposal as well. Environmental Quality Audit Let’s take a look at how this could play out; Wal-Mart paid a criminal fine of $11 million and another $3 million to the Missouri Department of Natural Resources, for violating the Clean Water Act by illegally disposing of hazardous waste materials. This is a serious violation and a costly one at that, environmental violations are not taken lightly so bear that in mind as you proceed.  

Conclusion

Understanding the most common reasons for quality audit failure allows you insight into the kind of supplier your brand should be aligning itself with. These audits are complex (especially the social and environmental audits), and it is up to the observation skills of your chosen auditor that will determine the level of compliance that a supplier meets. The audit report that your retail brand receives will present you with a full picture of all the risks a third-party auditing company is trained to see. It will be up to you to make a final decision, bearing in mind the authoritative position consumer’s today are in, by putting your customers first and producing products in an ethical manner, you automatically put your brand first.

Let us know in the comments section if this has been helpful information for you.

Ever wondered whether environmental auditing was for you? Check out our visual guide to help you on your way!

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Mold: The Unspoken Supply Chain Issue

Managing supply chain risk and disruption is currently one of the key priorities globally. In addition, many companies are rethinking their entire supply chain model, from raw materials to finished products. In that context, mold remains one of the issues that, while sometimes overlooked, may have an irreversible impact on different product types such as furniture made out of wood or natural materials, leather furniture and decorative items or soft and stuffed toys.  

Mold is not a new problem for suppliers, brands, and retailers, yet it has been accentuated since the ban on chemicals and anti-mold agents such as 2-Naphthol, P-Nitrophenol, pentachlorophenol, sodium arsenite, copper arsenite, chromate, dimethyl fumarate, etc. Additionally, there remains a lack of preventive measures in many factories, leading to the identification of the issue when it is too late.

In the current context of uncertainty, factories and brands are increasing their stocks of materials, components, and finished products and storing them for longer, leaving them ill-prepared to tackle mold prevention. The level of risk varies depending on the area and factory, but it remains a topic worth addressing when working with a new supplier. One additional variable to take into account is the type of product. Some materials need the right balance between dryness and humidity; for example, wood and bamboo require a certain humidity to avoid cracks. If the level becomes too high, it might lead to mold generation and potentially ruin the entire production.

Micro-organisms_W

Mold was among the top 10 most common microorganisms in non-food product recalls between 2005 and 2018
Source: FEMS Microbiology Letters, Dec 2019, Oxford Academic

Mold Formation: A close-up What is mold?

Mold is a destructive fungus that can grow in a high number of materials and be highly damaging if not adequately treated. Mold is reproduced by spores that can travel great distances and affect products from the early stages of development or even during shipping.

What are the main categories affected in the hardlines industry?

  • Leather items
  • Wood and natural materials
  • Soft toys
  • Packaging

What are the main associated risks?
Depending on the degree and the stage at which mold is identified, it can lead to:

  • Product damage (bad smell, stains, material damage…)
  • Product recalls
  • Negative brand impact

What are the main reasons for mold formation?

  • Process (ex. finishing line cooling units malfunctioning or non-existing)
  • Lack of environmental control in factory or warehouse
  • Raw materials / finished goods subjected to hot and humid conditions
  • Transportation conditions
  • Climatic conditions (ex. countries with high temperature and humidity are ideal for mold growth)

Climatic Conditions in Some Countries Favor Mold Formation

Mold_conditions

Ideal conditions for mold formation: pH 5, Temperature (25 – 37 degrees), humidity (56 – 90% RH), 3-7 days growth period. Environmental conditions combined with mold spores naturally occurring  have a big impact on mold generation, making June to October critical months

Mold remains one of the unspoken issues of the supply chain. There are many factors to consider, but is mold an issue that can be prevented? The answer is yes. There are many solutions available to tackle the problem, and the earlier in the supply chain the problem can be addressed, the lower your chances of affecting your production.

API can support you in your mold prevention from the early stages of development. Our solutions include:

  • Technical audit: review of the whole factory at system level to evaluate general conditions leading to mold formation
  • Warehouse assessment: visual control and humidity measurements of warehouse conditions, storage and dispatch of goods, etc.
  • Training on mold formation: tailor-made training based on actual factory and warehouse processes
  • Testing and risk evaluation
  • Re-inspection of long-term stored raw materials, components or finished goods


Interested in learning more about how our mold prevention solutions can help prepare factories and suppliers avoid mold generation, even in the critical monsoon season?

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Sourcing Diversification: New Countries, New Risks

With the outbreak of COVID-19, it became clear for many companies that there was a need for diversification in their supply chain-sourcing base. Businesses worldwide have become dependent on China, but leaving the country is not an option for all of them. The trend of avoiding trade war-related tariffs that had already started a few months earlier is persisting and brings new options to the table.

Sourcing_overview

China’s advanced role in global manufacturing makes it almost irreplaceable in the short term. Although the diversification of manufacturing options mitigates the risk of one central point of production, the challenges of new developing sourcing locations are to be assessed within the development of a new sourcing strategy. Vietnam, India and Indonesia seem to be some of the preferred destinations for upper-end furniture goods, while Malaysia is typically targeted for promotional to lower-middle price wood and upholstery items. Other industries, such as toys and DIY, are also changing their focus to other sourcing locations, with India a top destination followed by other SEA countries such as Vietnam.

what are some of the challenges to keep in mind?

China has been an industrial superpower for the last decade, accounting in 2018 for 28% of global manufacturing output. The mature industrial setup developed by the manufacturing powerhouse is yet to be replicated by some of the new manufacturing countries. In many occasions, a shift or sourcing diversification is not supported with the addition of local teams on-site, which combined with the current travel restrictions, lack of knowledge of the local manufacturing practices, and the impossibility to replicate the systems already functioning in China due to its inadequacy with the local situation, increases the risk of compromising the production’s safety and quality.


68% of companies considering sourcing out of China think of product quality as the greater risk
(Source: PwC ‘Global Sourcing Shifting Strategies’ report)

Some of the main challenges of the new sourcing destinations include:

Lack of parts and components locally
As an example, the furniture industry may face shortages of some metals and stone when producing in Vietnam, limited access to some wood species and components in Indonesia, or inadequate access in India to some hardware.

Less globally qualified workforce
Although some areas benefit from a highly skilled workforce, some countries present challenges when compared with China’s mature market, such as more limited finishing capabilities or limitations when working with some materials.

Lack of traceability of process and engineering changes
Reduced visibility in terms of product development and adjustments in the manufacturing process increases the need for a more accurate and standardized manufacturing process when compared with China.

New setups and lack of previous experience
The new processes make it difficult for the local workforce to prevent inadequate factory practices and anticipate risks.

Systems not adjusted to real risks of quality and safety
Limited risk mitigation before design and production results in products of potentially lower quality, and longer lead times.


Specialized solutions, such as technical audits, can help mitigate these risks in addition to assessing new suppliers when shifting sourcing locations and helping to secure production.

A technical audit will allow you to identify whether the factory can correctly manage the supply chain and has an adequate setup to mitigate risks. A factory with good procedures, instructions, and a clear record will be more likely to run properly – even with a less experienced workforce – thus reducing the risk of product quality and safety.

Some of the common points checked during a technical audit will cover:

  • Quality management
  • Product development
  • Incoming quality control
  • Production process control
  • Finished product quality control
  • Resource management
  • Measuring and testing equipment control

 

Our Technical Solutions

At API, we support our clients in their relocation to new destinations, helping them assess their suppliers’ risk.

Our proven experience has strengthened our customers’ ‘out of China’ strategies, benefiting from our expertise and supply chain knowledge. For example, we supported one of our customers in the relocation of some of their furniture lines to India with a tailor-made program with eight key steps that allowed the brand to shift a significant part of its orders in less than six months.


“A tailor-made program with eight key steps allowed the brand to shift a significant part of its orders in less than six months”

Some of the critical points addressed were:

  • Identification of the local manufacturing specificities and inadequate factory practices
  • Product risk and quality improvement
  • Lead time improvement

Some of our solutions to support brands, retailers and manufacturers in their relocation to a new sourcing location include:

  • Technical Audits: Our technical audit solutions cover the critical points addressed by industry standards, and our expert approach combines product expertise and manufacturing knowledge.
  • Dedicated Local Support: A lack of local support from your own teams in a new sourcing location can be remedied with API’s Dedicated Local Technical Support Program. Benefiting from our experts’ support on-site will allow a smoother relocation and help maintain quality during production thanks to an adequate risk assessment, resulting in process amelioration and improved product quality.

Interested in learning more about how we can support you in shifting sourcing locations?

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