Can a supplier charge for a Customer's audit of supplier?

[Jerome]

Hello dear Covers,

I'm certain there are people out there who've had the same question:
Can we (as a supplier) charge people how want to come and audit us?

As a manufacturer (35 employees) of devices and software systems for the nuclear medicine, we get more and more requests to come over and audit our quality system or product specific.
This becausesome of our clients (mainly hospitals) are forced more and more to comply to a hostpitals variant of the GMP. This results then in retrospective validation activities and (extensive) supplier audits.

Preparing these audits (both on-site and postals) cost me (and applicable co-workers) a huge amount of work and time (which I don't have or rather spend on maintaining/improving our quality system).

We are ISO9001:2000 certified and hold additional certifications for various product (medical, etc..), which should prove we have and follow a descent QMS.

To cover the cost/time we spend on these audits and to prevent (potential) clients of booking audits just to have a nice day out or some other no good reason, we want to charge them.
Also to seperate the serious ones from the "we don't know why the heck we're here but our GMP says so, we think.."

Is this strange, are we out of line or are we one of those silly companies who did it for free the past year or two.

Any help on this matter would be greatly appreciated.
I've done many searches but haven't found anything.

Kind regards,
Jerome

 

[Aaron Lupo]

Re: Can you charge for a supplier audit?

You can change them if you want, not sure how long some of your customers would still be your customer.

At my previous empolyer (Sterilization) we would average 40-45 Customer audits a year. We saw this as just part of doing business. We were a small organization so our resources were limited as well, however, we wanted to make sure the customer was happy.

Did they need to come in and audit us, I would say not really, we maintained ISO 13485:2003, FDA, MDD, CMDCAS, etc.. Most of these customers had a budget and liked to spend it. I tried to keep the Department Managers out of the audit as much as possible and bring them in only when needed, which was usaually at the opening/closing meeting and lunch time.

 

[e006823]

Re: Can you charge for a supplier audit?

A previous employer factored a nominal cost into bids if the maintenance of a QMS was part of the contract and or SOW.

 

[Jerome]

Re: Can you charge for a supplier audit?

At my previous empolyer (Sterilization) we would average 40-45 Customer audits a year. We saw this as just part of doing business. We were a small organization so our resources were limited as well, however, we wanted to make sure the customer was happy.

Thats quite a lot of audits! And these audits take 1 or 2 days?
As QA/RA responsible here I'm also hosting these audits together with a product expert to support me regarding the product they want to audit us for.

I guess I'll start instructing some deciples here to take over these audits so I can get back to my work... (the stuff they want to audit)

Thanks for your , Aaron

 

[Wes Bucey]

Re: Can you charge for a supplier audit?

Five years ago, in this thread ISO 9001 - Snake Oil? A discussion of the validity/value of ISO 9001 I wrote this post which referenced customer audits

Wes,
You make an excellent point when you highlight point 9. Not enough value is given to an organization that "self-declares" compliance to the Standard and offers to let any customer do an independent assessment to see if "the fact matches the brag." ... etc.

Thanks, Wallace. Every little affirmation helps!

When I was QM and de facto COO of a high tech contract machining company, we were searching desperately for the $$$ to get registered to ISO [1994] and QS 9000. One really sharp QM from a customer in California said, "Why pay that kind of money? We'd rather audit you ourselves and see the savings reflected in your prices." Another Q guy from an auto manufacturer said essentially the same thing. "You aren't a 'prime' - all you need to do is be compliant."

Thus encouraged, we created a "Self Assessment Manual" which listed the elements of each of the Standards in tabular form - the element in 1st column, our 'plain language' description of how we thought we met the element in Column 2, and the 3rd column left blank for the customer auditor to see if his assessment matched ours. We sent the SAM along to each new prospect. Fewer than 10% of customers ever came out to see for themselves. Most said, "If you have the chutzpah to lay this out, we're pretty sure you can back it up. We don't need to come out."

Those that did come out usually stopped about halfway through and said, "We're convinced. We don't need to see any more. By the way, do you mind if we copy this idea for our own company?"

Odd thing is, we had "customer satisfaction" on our list long before ISO and AIAG.

I think the key point was plain language description of how we thought we met the Standard. We did not use stilted language or parrot the Standard (which was already there in column 1 anyhow.)

We did say many times "we talk with our customer before, during, and after we produce a part to make sure it meets the customer's requirements."

In another thread (this year), I wrote

we pretty much do that here, Wes, but if you want to do an audit, you best set up a time to make sure that the players will be here too. There is a lot of difference in what we call walk throughs, and true audits.

The audit is of the process, not the individual. Even when the lights were out (turned on , of course, by the tour guide), the process continued. If in-process inspection was performed, it was done by automated probes, directly feeding data into programs which could shut down a process if a trend indicated an OOC condition. Since most personnel were cross-trained, we tried to assure a process didn't stop just because of the absence of an individual. We were relentless in seeking and removing bottlenecks.

When I say the janitor could conduct the tour, I meant it literally, right down to retrieving data or documents from the computer and presenting copies to authorized recipients. Obviously, we didn't give it to a customer's competitor. We had tracking to identify who retrieved documents and when with a failsafe (enter the customer code and software automatically denied info unauthorized for that customer.)

Heck! By the year 2000, customers were able to query our computer directly and draw down raw data or reports without ever physically coming to the site.

Our boast and followthrough was, "We do the impossible ROUTINELY!" We encouraged all personnel to work "smarter, not harder." I was happy to see an operator sitting at his desk in a soundproof room while his machine ran merrily along a hundred feet away, producing parts. That meant he had his process under control and was confident enough to let it run. I was confident enough in the operator that I knew he was working on something that would benefit the company and ultimately himself and not suspicious and paranoid that he was goofing off.

I've written on this theme before - we really walked the talk!

I guess you figured out my vote was "no charge."

 

[Wes Bucey]

Re: Can you charge for a supplier audit?

Sometimes customer auditors ask intrusive questions - everything from
Who is your biggest customer?
to
Who are YOUR suppliers?
(I am aware of numerous instances where unscrupulous and unethical customers sidestepped a supplier to buy components directly from the suppliers several links down the supply chain and give the parts to a more "favored" supplier, cutting the original supplier out of the chain.)

These questions don't have to be answered, but some suppliers feel pressured to give up the answers.

Here's how we handled the situation [from an old thread]

The problem of customers asking for confidential financial or sales information can be a very touchy subject. We were not a publicly traded corporation and considered information about our customers as trade secret (both our own secret and the secrets of our customers.) Our solution was to "inoculate" customers and prospects to prevent them asking the question. I no longer remember the exact language, but the gist of it was,
"We are a privately held corporation and do not disclose our financial information to any entity which has not signed a confidentiality agreement binding all principals, partners, employees, servants, and agents. We recognize some customers ask such questions out of concern whether the supplier has sufficient financial capacity to service projected orders. If your annual order will exceed one million dollars, we will supply a performance bond guaranteeing our performance if you will provide a similar bond guaranteeing your performance in purchasing.

"Some customers ask about who and how much business we do with other companies. We consider such information a trade secret and do not disclose such data. Please do not ask."

This "immunization shot" was part of the cover letter accompanying the [self-assessment] we sent.

 

[Jeff Frost]

Re: Can you charge for a supplier audit?

Yes you can try to charge for your time associated with the audits lasting 1 to 2 days. My organization has the potential of receiving a possible 250 2nd party audits a year. These audits are performed by the very same customers who also require us maintain ISO 9001:2000 or AS9100B registration.

The real kicker this year was a customer that required us to suffer through an audit of our QMS to the requirements of MIL-I-45208. They would not accept our ISO 9001:2000 or AS9100B registration.

 

[Randy]

Re: Can a supplier charge for a Customer's audit of supplier ?

Raise your prices for those that want the audits to offset the cost and when asked give 'em data to support your decision.

 

[Jerome]

Re: Can a supplier charge for a Customer's audit of supplier ?

Many thanks for your enlighting view on this matter Wes.
It's always a enjoy reading your extensive and detailed comments

Also thanks Randy, we made a slight increase on multiple products to cover their "quality and compliance costs".

Regarding the audit which was the source of my posting:
We had several requests for audits for the same product so we combined those and organised an audit day.
We fed them with presentations of the company, QMS and development and validation of the product at hand.
It saved us many loose audits and gave our clients the possibility to inter-discuss the problems they have with regluatory inspections.
That resulted also in some items with wich we could help our clients again.
We were very open in our presentations on product development and validation with some 'selected' examples and results.
Result of that was "Ahhh, very clear, but can we have a look at some documents just for the form" which was no more then a quick peak at QMS manual.

End of the day --> Everybody VERY happy
(even a little impressed)

That Self Assessment Manual is truely a great idea. We already started work on a somewhat simelar informativ document.

Many thanks again for your replies.

 

[Jerome]

Re: Can a supplier charge for a Customer's audit of supplier ?

Children today are tyrants. They contradict their parents, gobble their food, and tyrannize their teachers. Socrates (469BC-399BC)

Nothing much changed on this matter since Socrates....