Your Internal Audit Team: Internal or Hired External? Outsourcing Internal Audits

Re: Cost of hiring External Audit Consultant for ISO Process Audit?

Thank you very much for your response,

Acutally we are not charging the supplier anything. This is a compliance audit to ensure that their QMS is functioning which their business manager does not feel that it is. I was really looking for the comparison between what it would cost to send two of our people or hire one or two local consultants to perform the same function.

Thanks very much for the response!
Callie

Re: Cost of hiring External Audit Consultant for ISO Process Audit?

Calico said:

Thank you very much for your response,

Acutally we are not charging the supplier anything. This is a compliance audit to ensure that their QMS is functioning which their business manager does not feel that it is. I was really looking for the comparison between what it would cost to send two of our people or hire one or two local consultants to perform the same function.

Thanks very much for the response!
Callie

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In that case, it is common that actual costs (or a significant portion) be paid by that supplier, since it is in their interest to demonstrate their abilities. So, your travel costs etc. would be common. If you hired a consultant, their fees would also be a common expense. Typically, the supplier would arrange to pay me directly, rather than the customer being an intermediary..

FWIW:
As an executive, I ordered dozens of audits (of varying rigor, depending on criticality of product, of supplier, past history, rumors, etc.) by both internal and contract auditors. Since the audit was for our purpose, we paid fees and expenses. We were not so hide bound to insist the auditors buy their own lunch or dinner to avoid any whiff of "payoff." If we couldn't trust the integrity of the auditor to withstand the blandishment of a free meal, we didn't send him!

As a supplier, over the course of 20 years, I hosted several dozen audits (versus casual visits or "walk-throughs") by customers (the rigor varied.) Never once did a customer suggest I defray the cost in whole or part. Frankly, a customer who expected me to defray any part of a second party audit would have been handed walking papers. We only bought a meal at an outside restaurant about half the time - mostly, we just ordered deli sandwiches or pizza to eat in the break room. Beverages were always free for staff and guests or visitors - even the mailman and UPS driver. I recall one female auditor who begged off lunch to have a meeting with an old college friend, otherwise, I don't recall any others not accepting an offer to eat, unless they were offering to treat us!

For the sake of disclosure, we supplied aerospace, automotive, and medical device industries.

Wes Bucey said:

FWIW:
As an executive, I ordered dozens of audits (of varying rigor, depending on criticality of product, of supplier, past history, rumors, etc.) by both internal and contract auditors. Since the audit was for our purpose, we paid fees and expenses. We were not so hide bound to insist the auditors buy their own lunch or dinner to avoid any whiff of "payoff." If we couldn't trust the integrity of the auditor to withstand the blandishment of a free meal, we didn't send him!

As a supplier, over the course of 20 years, I hosted several dozen audits (versus casual visits or "walk-throughs") by customers (the rigor varied.) Never once did a customer suggest I defray the cost in whole or part. Frankly, a customer who expected me to defray any part of a second party audit would have been handed walking papers. We only bought a meal at an outside restaurant about half the time - mostly, we just ordered deli sandwiches or pizza to eat in the break room. Beverages were always free for staff and guests or visitors - even the mailman and UPS driver. I recall one female auditor who begged off lunch to have a meeting with an old college friend, otherwise, I don't recall any others not accepting an offer to eat, unless they were offering to treat us!

For the sake of disclosure, we supplied aerospace, automotive, and medical device industries.

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I agree the supplier should not be billed if it is a routine visit or a "look-see" to evaluate a supplier. I never see that. If it is a problem audit, or a series of visits to resolve a significant failure or problem with the supplier, it is not uncommon for the supplier to bear some or all of the costs, as a condition of doing business. I have also been hired by suppliers on the recommnedation of a customer to enhance their systems and performance, and in those cases, of course, the supplier is my client and is billed directly. I suppose it all depends on the circumstances and problems, and the significance of the business volume being offered.

Helmut Jilling said:

I agree the supplier should not be billed if it is a routine visit or a "look-see" to evaluate a supplier. I never see that. If it is a problem audit, or a series of visits to resolve a significant failure or problem with the supplier, it is not uncommon for the supplier to bear some or all of the costs, as a condition of doing business. I have also been hired by suppliers on the recommnedation of a customer to enhance their systems and performance, and in those cases, of course, the supplier is my client and is billed directly. I suppose it all depends on the circumstances and problems, and the significance of the business volume being offered.

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I see the reasoning, but I don't agree with it. Perhaps, because we were obsessive about product and service quality, we never had an issue that escalated to the point where a customer thought he needed reimbursement. However, if such a reimbursement clause was NOT IN THE CONTRACT, the customer would have been told to pack sand - the remedy for bad quality is cancellation of a contract, not an additional cost to take away the supplier's profit and then expect him to remain a happy supplier who acts as a "partner." (For the record, I would have NEVER accepted a contract which included reimbursement for an audit of my processes, but I willingly included clauses for reimbursement for independent lab tests for inspection or product analysis.)

Over my years here in the Cove, I have written repeatedly about the niche we carved with our customer base as the "go to guys" who worked as partners with our customers in their best interest. (one (broken link removed)) We charged more than competitors and our customers willingly paid the surcharge because the net value to them of our product and service made our gross charge a bargain.

Wes Bucey said:

I see the reasoning, but I don't agree with it. Perhaps, because we were obsessive about product and service quality, we never had an issue that escalated to the point where a customer thought he needed reimbursement. However, if such a reimbursement clause was NOT IN THE CONTRACT, the customer would have been told to pack sand - the remedy for bad quality is cancellation of a contract, not an additional cost to take away the supplier's profit ....

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I'm not sure I even agree with the idea, but it happens. It is unlikely your company would have fallen into such dire straights. But, there are cases where suppliers perform so poorly that a workout plan is developed. Who pays for what would typically be decided at that point. The automotive folkls have been very clever in how to extract funds from their suppliers. A more common situation may be that a customer reccommends the supplier seek professional help to improve their system.

Right now we are using an internal audit team. However they don't dig very deep into the administrative functions of quality (Mgmt Review, Objectives, CAPA's). We have undegone 3 audits (to FDA 211 & 820) by outside agencies (STR-R / UL & Intertek) for just one customer. I would like to use those audit findings as internal audits on the topics that my internal team is weak on and let my internals focus on the areas that they do well on or wern't covered. Can I use external Independent audits paid for by a customer for ISO-13485 internal audits.

This year our customer is now requiring US to pay for the external quality audit (again done by one of those agencies) on their product that they can give to their customer. If we can't use the ones that our customer paid for, can we at least get double use out of the one that we pay for?

This is always an odd one to audit or not.
Internal auditing is a useful tool providing the auditor or auditing team is confident and competent.

What I don't find useful is if the audit checklist is identical each time they are auditing. once all the corrective action has been put into place. you will not find any faults. Woolworth's and Coles audit checklist are evolving and cover different areas that pertain to the business to ensure the product and services that is provided meet their requirements.

As for the internal audit Team, it may feel adequate to use the same checklist for as auditing is not a productive and take the person away from the task they are dedicated to do. Time is money after all.

I suggest that merely that Internal audits should be as frequent as the business requires it to be and audit checklist should be easy to score. Pass fail NA with a comment section.

Every business needs to make money and ISO 9001:2008 is common sense written down as a standard.
Coming from a food back ground where Tooling Program, Haccp and training Competency and awareness is essential for the business to operate legally and
also be profitable we did not need ISO.
I am now working in a business that has ISO 9001:2008 though In my Opinion is over rate. Sure Policies, procedure, work Instruction, form and Control of records are essential, the internal audit should be more risk based as these day the WHS laws are so strict that you need a permit to breath.
Sorry for the rant but it take two to tango and every Internal Auditor need to be refreshed every three years that they do not get too set in their ways.

Ciao

If an organization hired a firm to provide it with some services as well as some consultation services, can this organization get co-sourcing staff for it internal audit department from this same firm ?

Modakek,

Depends on the context of your organization. If you're not certified to any standard then you can pretty much do what you like, in the context of ISO 9001 I still think you can do that but in other worlds I'm not sure.

What is the context you are thinking of?