Operational Audits: Benefits and Best Practices

Operational Audits in Manufacturing

Operational audits, or detailed analyses of company goals, planning, processes, procedures, and results, can be powerful tools for manufacturing companies. They can help an organization determine not only if everything is running as it should, but also identify areas for improvement and increased efficiency. Audits can help operations leaders identify what processes should change and how they can simplify overall operations to reduce cost and increase productivity. Technology that integrates all your operational data allows for more accurate, actionable insights, and reduces the amount of time and money spent on conducting an audit so you can avoid long delays or pauses in your day-to-day operational activities.

Benefits of Operational Audits

Besides meeting regulations and requirements, operational audits can be incredibly beneficial for manufacturers. These types of examinations ensure that everything is working as intended to uphold quality and safety, catching any issues or non-conformances at the source. Furthermore, operational audits help identify areas for improvement, uncovering opportunities for greater efficiency and cost savings. For example, layered process audits (a system of process audits conducted by multiple levels of management) have been shown to reduce internal defects by as much as 73% and cut scrap costs by over 50% in less than one year (1). Operational audits also help to ensure employee safety. This is especially significant in the manufacturing industry, which ranks third for on-the-job incidents, with an average of 400,000 non-fatal injuries a year (2).

Benefits of conducting an operational audit include:

• Greater product quality
• Improved customer satisfaction
• Reduced waste and rework
• Faster corrective actions
• Enhanced employee safety
• Boost in productivity
• Increased profits

Tips for Conducting an Operational Audit

Plan for Your Audit

Schedule regular audits to make sure your processes and operations are always running at peak efficiency. Alerting your team about when you will conduct an audit and which processes you will be examining allows them to properly prepare, so you can complete your audit quickly and without disrupting your production processes. If you need to pause warehouse operations to conduct the audit appropriately, planning ensures that you have enough inventory in stock to account for a pause in manufacturing activities. Enterprise Resource Planning (ERP) tools allow you to schedule a recurring audit, notify employees, and track your inventory stores.

Use Real-Time Data and Updates

To conduct an efficient audit that provides valuable and actionable insights, the information you gather on your operational processes should be as accurate and up to date as possible. Paper-based checklists are prone to error, and the data gathered by auditors is often difficult to aggregate and analyze. Technology that automatically syncs and updates all your financial and operational data in real-time and allows for a simplified view of this data, you and your team can easily identify nonconformities in the production process and potential areas for improvement and cost savings.

Track Your Audit Results

The primary goal of conducting an audit is to identify areas for improvement and act on them to optimize your operations. Tracking results, whether it is correcting any problems within a process or implementing new strategies, is imperative. Having a system that provides full visibility across all your operations allows you to monitor corrective action and determine if the change solves for the problem. For example, you can tie a particular process change to a specific change in production time, product quality, or cost savings, letting you know the exact impact on your operations.

Conclusion

Operational audits have multiple benefits for manufacturing companies. Operational leaders are using cutting-edge technology that allows for planning, collaboration, updates and accurate data and reporting to streamline audit processes make continuous improvements.

Sources:

1. https://www.ease.io/manufacturing-quality-control-the-difference-between-product-and-process-audits/
2. https://www.ishn.com/articles/111823-no-decline-in-2018-workplace-injury-rate

Learn more on audits in the manufacturing industry:

Manufacturing Audit Whitepaper

Learn more on audits in the food and beverage industry:

Food Audit Whitepaper