Hiring a Consultant to Prepare a Factory Audit

When obtaining serious business depends on the result of an audit, Chinese factories often engage a consultant. Unfortunately, in 99% of cases the focus is on “making paperwork look good” rather than improving systems and processes. I am going to describe each approach.

1. Consultants that make paperwork look good

As an auditing agency, we see consultants, or evidence of their work, quite often. I was curious about the way it works so I asked a friend of mine who knows this business intimately.

Those consultants promise a result: “you will get the certification/pass the audit, and then keep passing it in the following years”. Without this promise, few Chinese factory owners would pay them.

Those consultant bring a manual to the factory, rather than writing something customized for their activity and looking for areas of improvement. This manual is always the same, so naturally it doesn’t help the manufacturer improve over time… And all manuals end up looking the same!

Let’s take the example of a certification by a third-party registrar. Here is what a consultant typically sells to a factory:

1. One day to explain how to use the quality manual and what to tell the third-party auditor
2. One day to do an internal audit + provide proof of training of internal auditors (at same time)
3. One or two days to be present when the third party auditor(s) are on site, helping respond to questions, and so on

And then, for the re-certification, here is what the on-going engagement looks like:

1. Preparation of the re-certification (generally once a year)
2. One day to do an internal audit + provide proof of training of internal auditors (at same time)
3. One day to be present when the third party auditor(s) are on site, helping respond to questions, and so on

What is happening here?

• The manufacturer doesn’t take its quality system seriously. I think this is a deep cultural problem in China.
• The consultant makes good money for an easy, cookie-cutter type of service.
• Auditors see evidence of paperwork that is in order, know they can defend a passed result to their management in case of an investigation, and can “relax” (or get bribed) more easily.

My point is, this approach fosters serious integrity problems — not only in China but also in Hong Kong or Taiwan, and this issue is more obvious in smaller industries (where consultants and third party auditors often run into each other and become friends).

So, if one of your suppliers says they engaged a consultant, don’t expect improvements in quality or lead times…

2. Consultants that improve processes

This topic is particularly interesting to me since I see it from both sides… As an auditor but also as a consultant. We were engaged several times by factories that needed to pass an important audit from a large customer — usually after they failed a first audit and were wondering how to pass the re-audit.

We explain to them that a factory that does a good job of improving its processes will enjoy lower costs and higher quality… AND will pass audits much more easily.

Let’s take a simple example. The act of tracking quality defects, attacking the root causes of the most frequent ones, following up on data, and repeating that cycle, is very helpful to any factory. It decreases their quality issues but also rework, scrap, and customer complaints. And, at the same time, it makes auditors happy since a good continual improvement process is in place and has proven its effectiveness.

Let’s take another example related to social compliance. Instead of preparing fake payroll records and briefing the staff on how to lie to the auditor,  why not make changes in processes to increase efficiency? This way, the factory can truly respect the law and keep working hours below the limit. It usually does not require investment for higher automation.

A lot of the work we do in most Chinese factories (which have immature systems) is putting in place prevention. They often need preventive maintenance, a quality system, changes in purchasing and planning to lead to lower inventory levels, daily production meetings based on data, etc.

All of these elements take an effort on the factory’s side, but pay themselves back many times… AND they help get better scores on audit checklists.

I wish more Chinese factories were tempted to choose the “high road” of process improvement, rather than the “low road” of superficial fixes.

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What do you think?