Why audits are sequential, not parallel

Most buyers run audits as a checklist exercise — visit, score, decide. Magnus runs them in three escalating stages. If a factory fails Stage 1, we don't waste two days on Stage 2. The order matters because cost compounds: a Stage 3 audit costs us 6× a Stage 1 visit, and we'd rather kill bad-fit suppliers early.

Stage 1: the four-hour visit

Twelve checks. Pass or fail. No room for nuance:

  1. Legal registration valid (GST, factory license, environmental clearance)
  2. Roof, floor, and walls structurally sound — no improvised fixes
  3. Fire exits visible, unlocked, and labelled
  4. Toilets and drinking water meet basic hygiene
  5. Workers wearing PPE that matches the process risk
  6. No visible underage workers (anyone who looks under 22 we verify)
  7. Equipment safety guards present where required
  8. Production records exist in some form
  9. QC area physically exists and has staff in it
  10. Owner or plant head answers basic questions about volumes confidently
  11. Tooling storage is organised, not piled in a corner
  12. The factory has a name on the door that matches their paperwork

Twelve sounds basic. Roughly 35% of factories we visit fail at least one of these. The most common fail: number 9. QC is on the org chart but not on the floor.

Stage 2: the two-day technical audit

Now we go deep. Eighteen checks across four domains:

Equipment & process (6 checks)

Machine maintenance logs, calibration certificates, process capability data (Cpk values), tool change records, setup time tracking, scrap rate logs.

Quality systems (5 checks)

Incoming material inspection, in-process inspection gates, final inspection coverage, non-conformance procedure, customer complaint log.

Materials & traceability (4 checks)

Material certificates filed and retrievable, heat-number traceability through production, lot segregation for different customers, rejected material disposal records.

People & process control (3 checks)

Worker training records, standard operating procedures at each workstation, shift handover logs.

Stage 3: the production trial

If a factory clears Stages 1 and 2, we run a paid trial production of 500–2000 pieces. Eight checks during the run:

  • Did they hit the agreed start date?
  • Are the first 50 pieces inside spec?
  • Does the operator know the drawing — or are they working from memory?
  • What does the Cpk look like across the first 200 pieces?
  • Did they catch a deliberately introduced anomaly we planted in incoming material?
  • How fast did they respond when we asked for a mid-run sample?
  • Did the final shipment match the quoted lead time within 48 hours?
  • Did goods-in inspection at our facility match their first-pass yield claim?
Field note

A factory that passes a structured audit is no guarantee of perfect production. But a factory that won't allow one is a guarantee of bad production. Always audit before you scale.

Seven deal-breakers — instant fails

Some signals override the score. If any of these show up at any stage, the factory is out:

  1. Falsified material certificates. Once is forever.
  2. Workers without contracts. Not a quality issue — a sleep-at-night issue.
  3. Active environmental notices unresolved. Future enforcement risk.
  4. Subcontracting without disclosure. If they hide it, we never know what we're buying.
  5. Owner unwilling to sign a quality agreement. They know the standards are unrealistic.
  6. Audit refused on safety grounds. The grounds are always real.
  7. Cash-only payment to workers. SMETA-fatal and a flag for everything else.

What we publish to clients

Each audit produces a 14-page report: scorecard, photo evidence, sample-data, deal-breaker flags, and a green/yellow/red recommendation. Clients see the report verbatim — including the things we'd rather not show.

About 12% of factories we audit clear all three stages. That number is the right one. If everyone passes, the audit is theatre.