Suppliers Starting to Charge A Fee for Customer Audits

Hi Gstough, I may have missed it the above posts; any insight as to "justification(s)" for the excessive number or audits? From both sides of this equation, "sometimes" an OEM has specified number and frequency in the source package + Quality Requirements. The formal agreed to definition of "audit" may pose some challenges as well. And yes some OEMS may use the random audit for training newbie SQA folk...

And in other instances if there is a real or emerging quality or capacity issue with Vendor A's widget, then such unscheduled audits may be fully warranted. In very general terms once a supplier has been initially audited/assessed and passed (i.e. a Supplier Eligiability Assssment), then barring above such issues, annual audits at the customers discretion and supplier timing concurrnce, are "normal". This has been my experience; some of this may attirbuted to COVID remote impacts...catch up of sorts...my three Euros

Hope this helps...
Cheers, Optomist1

I've just posted similar to below in "the other thread" where this is being discussed; ISO13485 and MDSAP are even more rigorous that ISO9001, so there really should be very little need for chargeable customer audits over and above recognised international certification audits (IMHO). There may be a need for a customer audit to agree/verify that specific terms and conditions are being implemented, but otherwise ...... ??

In the EU I would think that these "mandatory paid customer audits" would be considered as "unfair business practices" and outlawed.

Take a step back, the main objective of ISO9001 (formerly BS5750) when it was introduced was that as a supplier, you were subjected to one set of totally independent audits every year (and that was it, as far as quality audits go) rather than having to host numerous audits from every customer and potential customer. Something has gone badly wrong when not only do you have the time/cost implications of the independent audits but also continuing customer audits, especially when customers start charging you for the "privilege" of going business with them

GStough said:

For maybe the second or third time over the last 2-3 years, when reaching out to suppliers for audit dates I've received some push-back from them saying they've begun charging a fee for customer audits (usually in the $3k-4k range). Their reason is the same: it's expensive for them to host multiple audits throughout the year and they feel they need to recoup the cost from lost production time, resources, etc.

I'm just wondering if anyone else in the medical device industry has run into this and how have you addressed it? Did you pay the fee and move forward with the audit or did you manage it some other way?

Thanks in advance for sharing.

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Have experienced the same in the ISO13485 world, typically for suppliers that host a large number of customer audits. In my view once you get such a quote, the supplier has already made up his mind, is not open for negotiation anymore and will not lower/erase the audit fee. You could try negotiating that they consider this audit fee in their price calculation for the parts/services they supply or that they do not raise this audit fee in the next 5 - 10 years. But otherwise, in my experience you would just take that fee and move on.

You can always just load your selling prices to the supplier to claw back the costs of their chargeable audits.....

a bit more; I have seen instances where a supplier negotiates and treats "random audits" much like software re-flashes or updates (that are requested due to issues external to the suppliers module or sub-assembly) the supplier includes and clearly states "X" number of re-flashes or audtis are included...anything above that agreed to or stated number incurs a set charge.

Bev D said:

I’ve never been a proponent or fan of ‘redoing‘ a certification audit at a certified supplier. They are exactly what “certification to a unified industry standard” were developed to avoid. Seriously, if an organization is certified to ISO-XXXX or whatever, what value is there in a Customer are-auditing them to the same standard? It’s a total waste of tiem for everybody except those trying to pad their frequent flyer miles…

I am a big proponent for auditing for specific technical issues that are of direct effect on the Customer. This doesn’t tie up extraneous resources and it goes directly to what a Customer needs to ensure quality….

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I completely agree with you. Why do we need to spend lot of money for getting ISO / IATF / AS certifcation? There is no meaning in customer coming and auditing as per the same standard. Always understanding & interpreptation on the standards differs from person to person. Instead only specific requirements can be audited.

SREEDHARA HN said:

I completely agree with you. Why do we need to spend lot of money for getting ISO / IATF / AS certifcation?

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It's called meeting customer expectations and when you do so they'll buy your junk.

I have not heard of suppliers charging customers for audits. I'm in the medical device industry and limit our supplier in-person time by performing a desk audit, and then perform the in-person audit. Taking this approach our in-person audit time has been reduced significantly. During the in-person part we focus on the high risk and clarification. This is assuming our supplier is willing to share documents vis email, so we may perform the desk audit. I have only one supplier who will not share, and if I were them I would not share via email. For the most part it works out.

For customers that we supply, the Quality team is billable to current projects. For example, if supplier "A" audits us for three days, and my time devoted to the audit is 24 hours, then I expense the hours across supplier "A" projects.

Bev D said:

I’ve never been a proponent or fan of ‘redoing‘ a certification audit at a certified supplier. They are exactly what “certification to a unified industry standard” were developed to avoid. Seriously, if an organization is certified to ISO-XXXX or whatever, what value is there in a Customer are-auditing them to the same standard? It’s a total waste of tiem for everybody except those trying to pad their frequent flyer miles…

I am a big proponent for auditing for specific technical issues that are of direct effect on the Customer. This doesn’t tie up extraneous resources and it goes directly to what a Customer needs to ensure quality….

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I agree completely. Whats the point in my supplier being IATF certified, if I still need to come in and audit the same stuff? Especially if there are no issues at that supplier.
I do have one customer who has written in their system that they will conduct on site audits for each of their suppliers annually. They really put themselves in a corner in my opinion. You have a supplier with very poor quality or delivery performance?? Sure, an on site audit may be necessary. At the same time, if they are performing that poorly, what value are they getting from their certification?

Mikey324 said:

Whats the point in my supplier being IATF certified, if I still need to come in and audit the same stuff? Especially if there are no issues at that supplier.

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Firstly, they shouldn’t be auditing the same stuff. Their second party audit should be laser focused on issues related specifically to their product lines. Generic QMS auditing should never be the scope of a supplier audit if they are reliably certified.

Secondly, supplier audits is a way for some SQE’s to justify their position in the organization. And, it doesn’t hurt, to accumulate loyalty points with airlines, hotel chains and rental car companies.

Thirdly, when is -20°F somewhere out there, is a nice 73°F right now here in Orange County, California. A good time to audit some suppliers in So Cal.