I just got a letter from a customer informing us that they have "partnered" with 3rd party to perform supplier audits.
This is a very large medical device company.

I don't like it. I don't like it at all.

It seems to me the the partnership emphasis should be between the supplier and the purchaser -- not the purchaser and the third party, treating the supplier like a bastard stepchild. And that also opens more sets of eyes to proprietary processes.
It also reduces my confidence as a consumer that the eyes of the designers of the devices are not on the products/process, but some third party that is possibly totally unfamiliar with the part or application.

All our other customers audit us with their own staff.

thoughts?

I have to agree that the relationship should be supplier~purchaser and not involve a third party. In a perfect world this business relationship would be a joint venture to achieve higher standards....however, the truth in the matter is that time is money. It could be that your customer simpy feels they don't want to concentrate any in-house resources on a supplier audit/survey system that has become cumbersome and prefers to focus their manpower and concentration on their immediate business and allow this third party to work as a watchdog for supplier issues, it's probably simply seen as economical rather than "treating the supplier like a bastard step-child".

Unfortunately, it seems that suppliers often are squeezed for as much as a customer can get as fast as they can get it and the human factor is often removed from the equation...there's plenty of competition that would be perfectly willing to take your place as supplier and customers won't hesitate to make that switch.

I'd also agree that it doesn't seem a wise choice in my view...as you stated a third party supplier evaluation will undoubtedly lack the expertise of the designers and may prove to be inneficient on technical understanding. Whether this will adversely affect your business relationships with this company, I don't imagine so, however it is unfortunate that if this third party party proves to be inefficient it could likely cause issues for you as well.

I have to agree that the relationship should be supplier~purchaser and not involve a third party. In a perfect world this business relationship would be a joint venture to achieve higher standards....however, the truth in the matter is that time is money. It could be that your customer simpy feels they don't want to concentrate any in-house resources on a supplier audit/survey system that has become cumbersome and prefers to focus their manpower and concentration on their immediate business and allow this third party to work as a watchdog for supplier issues, it's probably simply seen as economical rather than "treating the supplier like a bastard step-child".

Unfortunately, it seems that suppliers often are squeezed for as much as a customer can get as fast as they can get it and the human factor is often removed from the equation...there's plenty of competition that would be perfectly willing to take your place as supplier and customers won't hesitate to make that switch.

I'd also agree that it doesn't seem a wise choice in my view...as you stated a third party supplier evaluation will undoubtedly lack the expertise of the designers and may prove to be inneficient on technical understanding. Whether this will adversely affect your business relationships with this company, I don't imagine so, however it is unfortunate that if this third party party proves to be inefficient it could likely cause issues for you as well.


well - I'm sure it's economical reason.
I don't think they're trying to alienate their suppliers.
But I feel that's what this attitude leads to.

I guess the next step is outsourcing supply chain areas is purcahsing.

Several of our customers have sent in third party (contract) auditors. I've never really found any problems, they come, they look, they question and then they report back to the customer that we are doing what we should be doing.

We've had one situation (NQA nuclear audit) where the auditor was a butt, we still passed the audit, but the auditor was mean to our people, I just called the customer and told them that we were not going to allow anyone to come in and insult people. They agreed, apologized, and we've never heard anything more about audits from them.

I think several CB's offer "2nd party supplier assessments" services. Just like 3rd party certification, this could be a value added exercise or a waste of time, money and effort. It depends on the seriousness, competence, process design and attitude of the parties involved.

Any (serious) organization understands that they can not relinquish responsibility for supplier oversight. On the other hand, in the age of supply chain globalization, it is not easy for many north american organizations to maintain a cost effective way of physically assessing suppliers in Asia, East Europe, South America (for example). Besides traveling costs, cultural differences and language barriers sending supplier reps all over the World might lead to more problems than solutions. Partnering with an organization, such as a CB with global footprint, might assist the organization in better manage their supplier oversight requirements. Once again, provided all parties have a common goal and are serious about it.

I don't think so. As a matter of fact,our company is always audited by 2nd party and our company always audits supplier by itself.

I am really concerned; first there was a mandate from the big companies that all the suppliers should be ISO-9000 certified. Then came the demand that they are also ISO-14001 certified. Some have extended that to SA-8000 and OHSAS 18000. Now more and more big companies are asking their supplier to be audited by third party auditors (again quite a few of these auditing agencies are from the ISO-9000, ISO-14001, SA-8000, OHSAS 18000 certification bodies); a comprehensive audit of a medium scale (FTE: approx 500) organization takes about 10 mandays (I was involved in quite a few of such audits in the last three years). One can imagine if a supplier has, say, 5 customers who require these audits - 50 mandays for these audits alone ...each of these five audits are repetitive and add no real value (I presume that the first audit should have brought out all the relevant risk areas). Can customers come together and have one audit and share the audit report ? That will reduce the pressure on the small/medium scale industry and release their time for more productive work. If the customer is going to audit the supplier comprehensively (say based on EFQM Excellence Model) why insist on ISO-9000, ISO-14001, SA-8000, OHSAS - 18000 etc certificaitons ? I think it is time to review the whole "customer audit" to rationalize/optimze on cost, time, effectiveness and usefulness

With best regards,

Ramakrishnan

One additional question is the qualification of the 3rd party auditor.....do they know what they are doing? Are they from the industry?

This will sound bad, but having been a customer of ISO 9K Registrars (in a preious life).....the 9K approach takes someone who may/may not know the industry or have that technical background and lets them do audits.....

Not always bad, in fact usually OK.....but if technical requirements are seriously important, like say, Part 11, then perhaps a different approach should be considered.....

Staff is of course the first choice.....but if a 3d party is required, and technical knowledge is a hard requirement, then consider requiring accreditation to ISO/IEC 17020.....

Just being a troublemaker here.......

I understand the concerns of bringing in a 3rd party to conduct a 2nd party audit, especially those of confidentiality and the 'partnering' benefits. On the other hand (please don't take offence to this remark), the standard of some 2nd party auditors is sometimes questionable. I often have people attend a 2 day internal auditor course who cite their primary reason for attendance as being to enable them to conduct supplier audits.

At least by using a 'professional' auditor there should be a better standard of audit which helps to make up for the lack of ownership that may occur. By the way, I am not suggesting that all 3rd party auditors are great and 2nd party auditors are not - that is not the case!:D

......

At least by using a 'professional' auditor there should be a better standard of audit which helps to make up for the lack of ownership that may occur. ...

Agreeing with what Colpart has said i would like to add that a professional / third party auditor can only do you some good. For one he would be unbiased in his approach and secondly he may only come up with important findings worth considering for improvement which otherwise may only look biased and frustrating (sometime) at some point in a customer's audit team.

As far as the trade specific competence is concerned, I'm sure the customer must have taken such care in his own interest and would be open to auditee's (the supplier) opinion as well.

well - I'm sure it's economical reason.
I don't think they're trying to alienate their suppliers.
But I feel that's what this attitude leads to.


My guess is they either decided to let someone else maintain their auditing skills, rather than deal with that overhead inside OR they may also believe that a third party may be more impartial - although we all know that is not necessarily the case. Many purchasing areas are distrustful of cozy relationships - and this may be a way to satisfy their own minds that this does not occur with their audits. :cool:

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I believe that there is a valid concern about outsourcing supplier audits. But there was also a concern about outsourcing a lot of the product realization processes many manufacturing organizations underwent. The paradigm shifted. And shift happens. Most non-core processes will always be candidates for outsourcing. This is a "new one". As I said in my previous message, the key is to do in a way that the 3 parties win. If one of the parties think they are getting the shaft, the process was not well thought through.

As discussed in other threads, one of the common dysfunctions for a typical second party auditor is to suffer from micro-managerial syndrome.

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Most non-core processes will always be candidates for outsourcing.

I find it fascinating to see what some companies believe is non-core. Ultimately, nothing is core - let your competitor do everything for you! :cool:

Hershal, you are not a trouble maker, ultimately, the audit and the information gained from it is only as good as the auditor performing the service.

I understand the concerns of bringing in a 3rd party to conduct a 2nd party audit, especially those of confidentiality and the 'partnering' benefits. On the other hand (please don't take offence to this remark), the standard of some 2nd party auditors is sometimes questionable. I often have people attend a 2 day internal auditor course who cite their primary reason for attendance as being to enable them to conduct supplier audits.

At least by using a 'professional' auditor there should be a better standard of audit which helps to make up for the lack of ownership that may occur. By the way, I am not suggesting that all 3rd party auditors are great and 2nd party auditors are not - that is not the case!:D

No, there are good internal auditors. I am performing an advanced 3 day class right now, in fact.

However, there should be a difference in depth and results when you conpare an auditor who just completed a 2 day class, vs a 3rd party auditor with 2500+ audit days, don't you think? I can see a lot of benefits for using an experienced 3rd party auditor. Even better, would be to use the same one all the time and develop a rapport and synchronize the approach.