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

[Joe Cruse]

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

I agree with Wes and Randy. A lot of how you approach that should be based on the number of clients wanting to come and time involved. I'd have recommended what you have done, and build the cost of this expense into the product base, given that it has truly become an expense for your business.

Given the current business environment, we might pay to get some more customer base in and sniffing around

 

[Stijloor]

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

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

Jerome,

When contactually agreed upon, yes.

Stijloor.

 

[silentrunning]

Being that I live in the middle of paradise and the beach is about 2 minutes from our shop, it is amazing how many people want to come and audit us from the north during January and February. We will charge the tire kickers and have done so in the past. The big prime contractors have it stipulated in their purchase orders that they have the right of survailance so they get a free pass. We also will not charge if there has been a quality problem (rare).

Doug

 

[Bob Bonville]

jerome, These days, boondogle audits will be few and far between. Most potential customers want to determine for themselves that your system meets or exceeds their requirements.

It is not a good idea in my view to even consider charging a client or potential customer for their time in your facility conducting their audits/evaluations. They are required by standard to evaluate you or qualify you in order to place an order in your company.

One tactic I have used in the past to offset a potential audit is to offer the results of 2nd party audit from a customer you both share. This may work or at least mitigate the scope of the audit to those things your common customer discovered during your audit.

If your quality system is healthy and improving, you should need little preparation for a 2nd party audit, except from the normal logistical and housekeeping preparation. Don't look at it as a burden, but rather an opportunity to show your potential customers/clients how good your system is.

Bob

 

[JaneB]

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

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

Sounds like a win/win. Excellent approach you took, which met the needs of the various parties and with a good outcome. Congratulations.

 

[MIREGMGR]

We usually like being audited.

Our largest customer, in particular, has been very helpful to us. Not all of the people they employ worldwide in the Supplier Engineer and similar roles are equally sharp, but the senior ones that periodically visit us are top notch.

Heck, we pay a lot of money for the very constructive audit criticism from our NB. It's nice to get even more such constructive inputs for free, other than the cost of some of our time.

That's not to say that every moment of our audit relationship, both of us are happy. Occasionally they tell us things that for the moment we wish they hadn't concluded, or noticed. But it doesn't take much hindsight to recognize how much we've improved over the course of our active-regulatory-management history.

In return, we help a number of our customers by acting as their design control department and material/process/clinical-functionality experts, and (particularly in the case of the large customer above mentioned) by providing them with institutional memory and supervisory oversight of their design inputs to us.

It all works out. We send our customers product designs and then product, they send us auditors and money. They're happy, we're happy.

 

[Sam4Quality]

We have in the past visited our suppliers to audit their processes, and the kind of treatment they always gave us is first class. Although, we go ahead and conduct the audit professionally, sometimes, just the warmth and courtesy extended by our suppliers makes us go back to them, quality of product notwithstanding.

I believe this relationship between the supplier and the organization is very important for a collective effort towards a quality product. What the heck, they take the audit immensely positively, take our feedback seriously, and we gift them AC units (not that often though ) for their offices and fix it for them too. Despite this, the level of professionalism and effort towards improving product and processes goes a rung higher. Talk about mutually beneficial supplier relationships! . Sounds like a fairytale? Its real for us.

Ciao.

 

[JaneB]

We have in the past visited our suppliers to audit their processes, and the kind of treatment they always gave us is first class. Although, we go ahead and conduct the audit professionally, sometimes, just the warmth and courtesy extended by our suppliers makes us go back to them, quality of product notwithstanding.

I believe this relationship between the supplier and the organization is very important for a collective effort towards a quality product. What the heck, they take the audit immensely positively, take our feedback seriously, and we gift them AC units (not that often though ) for their offices and fix it for them too. Despite this, the level of professionalism and effort towards improving product and processes goes a rung higher. Talk about mutually beneficial supplier relationships! . Sounds like a fairytale? Its real for us.

Lovely example of mutually beneficial supplier relationships in action, Sam.

 

[derhahn]

The answer to the question really depends on what you have to offer. If you have something of value to the customer you will get a lot farther with this idea.

I was the Quality Systems Manager with another division of my current company that provided software based systems for drug companies. These were used to manufacture their products and so were subject to validation requirements, often including customer audits. We had an audit routine that walked them through their needs and how we met them. The results were uniformly positive because we new what they needed and had solid systems in place. The audits took significant time and expense to handle. More importantly, it took key software people away from developing new software.

We developed a two step a approach to work with customers to minimize the impact of audits. First, we had an independent outside auditor do an audit that was available through an industry related audit repository. This third party audit cut down on the number of customer audits, much the way our ISO 9001 registration worked in other industries.

The second step involved an audit price list that help discourage audits by people that weren't serious. We allowed Sales to discount the price based on the specific relationship and our desire to penetrate an account.
The first audit for a customer was usually at no charge, but we did tell them about the price list. We wanted them to see the value up front. Customers requesting subsequent routine audits would be refered to the price list.

To be honest, I don't know if they every sent out an invoice for an audit. I do know that the price list avoided some audits. I don't believe it scared away any customers because of the alternatives we had available.

Just having the audit on a price list makes you think about it differently. You need to deliver value even if you don't send an invoice. I also felt that people on the inside were more open to the interuptions when they realized there was a specific price for these audits. Customers were more likely to get everything done the first time if they thought the next one was on their nickel.

This approach falls apart if you have a weak system and/or don't understand your customers' needs. In that case the answer to the original question the would be "No!" If you have everything nailed down and can deliver value then you should at the very least understand your internal costs for customer audits. Then you can evaluate the situation and price your products (or the audits) appropriately.