Compliance Gets Results
The path to profitability may involve better audits.
The importance of auditing should not be overlooked. As longtime Quality columnist Jim Smith writes, “It’s rare that managers, or even most quality auditors, discuss how closely tied the findings of manufacturing audits are to the long-term ability of their companies to compete in this highly competitive market.”
Smith goes on to write, “It’s not enough to focus on the manufacturing floor anymore. Quality auditing and the gathering of impartial data has to be the new force of change.”
Auditing, in other words, should be thought of as a force of change rather than a stressful time that slows down the business.
What exactly is an audit? According to ASQ’s quality glossary, an audit is “The on-site verification activity, such as inspection or examination, of a process or quality system to ensure compliance to requirements. An audit can apply to an entire organization or might be specific to a function, process or production step.”
While this may sound dry—compliance to requirements is not exactly a stirring call to action—it can be an invaluable tool. Rather than thinking of it as a way to check boxes for a day or so and move on, it can also help with profitability and processes.
Michael Minnis is a professor of accounting and a Charles E. Merrill faculty scholar at the University of Chicago's Booth School of Business who discussed the importance of data in an article in Crain’s Chicago Business. “When owners and managers saw audit results, they were often surprised to see the ways in which they could reduce inventory losses, improve accounts receivable collections and improve overall profitability,” writes Minnis.
He conducted studies that found “companies getting audits were 5 percent more likely to survive the financial crisis from 2008 to 2010.” In addition, of those companies that survived, “those with audits had 1.7 percent more growth than their nonaudited counterparts.”
In times of crisis, it is helpful to know that there are ways your organization can succeed. Minnis writes, “I suspect that those businesses that survived and even thrived during one of the worst economic downturns did so because they had better data to back their requests for loans. They had clear pictures of their business operations when making decisions. They had a lot of accurate data to work with.”
The value of audits is no surprise to Lorri Hunt. Hunt is a U.S. technical expert and co-convener for ISO 9001:2015, a co-author to “The ISO 9001 Handbook, A Practical Guide to Implementation,” an Exemplar Global lead auditor, and the president of Lorri Hunt and Associates Inc. She wrote about auditing in the electronic age in an article for Quality. “In today’s auditing environment, most organizations would have an online tool that organizes documented information for engineering projects. This might be a SharePoint site or a software program that has been purchased for the purpose of storing documented information related to design projects.
“When documented information is easier to locate and retrieve, the auditor has more time to focus on other areas of the management system,” Hunt writes.
In other words, organized companies can benefit from the auditor’s experience and guidance instead of wasting time searching for requested information. It’s also a better feeling for the auditee. Isn’t it better to have what you need at your fingertips—or a click away—rather than frantically scrambling to find it?
If you’re sold on the idea of audit value, the next step might be to get the right tools in place, whether that be in terms of software or staff to conduct the audit. From there, consider what type of audit might be most productive.
One common type of audit is a system audit. “It can be described as a documented activity performed to verify, by examination and evaluation of objective evidence, that applicable elements of the system are appropriate and effective and have been developed, documented, and implemented in accordance and in conjunction with specified requirements,” according to ASQ. One subcategory of system audits is a quality management system audit. As the name describes, this means determining how well the system conforms to company policies, contract commitments and regulatory requirements.
While audits can benefit your company, they can also benefit you as an individual. Specifically, your wallet. Getting an auditing certification can increase your earning potential significantly. According to the ASQ salary survey, U.S. respondents who completed any level of auditor training earned salaries such as $101,482 for quality engineers (CQE) and $108,511 for managers of quality/organizational excellence. Quality auditors (CQA) earned almost $10,000 more, according to the survey.
Auditing requires some initiative but the results should be worth it. On the ASQ Ask the Experts blog, ASQ Fellow Denis J. Devos from Devos Associates Inc. explains that “An audit of a manufacturing process wouldn’t just inspect the product, it would ensure (at a system level) that required inspections had already been performed on the product.” He writes, “An inspection is down in the grass, but to do an audit, you have to climb a tree.”
And what could be more fun than climbing trees? In other words, audits can be an adventure that your company and career can benefit from.