Vol. 4, No. 8, August 2020


2nd Party Audit & 3rd Party Audit (Ⅰ)

Back in June of 2017, we briefly explained the types of audits in supplier quality management. While first-party audits refer to internal audits, second-party audits are undertaken by customers on their suppliers to verify if the suppliers’ quality management systems meet the requirements, and third-party audits occur when an organization decides to be certified that its quality management system conforms to standards such as ISO 9001 or IATF 16949.

With the on-going coronavirus pandemic worldwide, international traveling is still severely restricted. As a result, for now and the foreseeable feature, international buyers would have to completely rely on local service providers or a combination of on-site activities and remote monitoring and participation with real-time live-streaming, to regularly assess the current suppliers’ quality compliance or new suppliers’ quality capability with supplier audits.

When international buyers are not able to be physically on the ground to inspect and audit the suppliers, audits by local service providers become even more important. Based on this writer’s years of experience in both 2nd and 3rd party audits on automotive suppliers in China, we’d like to share with you our analysis on the similarities and differences between these audits, to help decide on the appropriate audits to be undertaken.

▍Audit purpose

2nd party audits: It is an audit of suppliers conducted by customers or entrusted institutions. The customer chooses the appropriate factory and confirms that the factory continuously meets the specified requirements, i.e. the factory is capable of producing certain products. The audit results usually provide basis for the customer’s decision-making on purchase. During the audit, priority should be given to the impact of the purchased products on the quality or use of the final products in order to determine the audit method and scope. In addition, factors such as technology and production capacity, price, timeliness of delivery, service and other factors should be considered. The 2nd party auditors act as coaches, providing companies with suggestions on rectification measures and solutions for improving the quality management systems when conducting specific supplier audits according to customers’ requirements. The ultimate goal is for the joint development and improvement by both the suppliers and the customers.

3rd party audits: It is an audit of a company by a third-party, also referred to as external audit. The audit is conducted by a third-party certified organization and a certificate is issued after the company’s passing the audit. The 3rd party quality management system (QMS) audit is mainly divided into two stages. The first stage is the review of QMS documents, the second stage is the review of the level of compliance of the actual operations against the specific requirements (laws and regulations, manuals, QMS standards). Third-party audits are usually undertaken for the purpose of certifications. A third-party audit, where a third-party certification organization applies requirements of accreditation systems for the purpose of issuance of certification, is known as certification audit. The intention of the certification audit is to provide objective evidence and written guarantee of compliance by the audited party.

(To be continued)

By Felix SS YUAN


Ignition Coil

The main function of automobile ignition coil is to enable the spark plug to produce spark and ignite the mixed gas in cylinder. Under normal conditions, each cylinder is equipped with one set of ignition coil and spark plug. Its function is to change the 12V low-voltage current of the power supply into high-voltage electricity (15-20kv). The air is then ionized through the spark plug in the cylinder to produce electric sparks, which ignite the mixed gas in the cylinder and power the engine.

▍Primary failure modes

● Product cracking leading to no voltage, vehicle shaking and weak idle speed (multi cylinder)

Preventive measures: for products with iron core protection cover, check whether the iron core protective cover is missing or damaged; for products without iron core protection cover, check whether the plastic insulation paper of iron core is damaged; whether the grounding plug or magnetic ring is short-circuited with the primary coil, strengthen the short circuit detection, and apply 100% inspection.

● Coil breakdown, secondary coil partial failure, low voltage output, ignition failure.

Preventive measures: Check whether the secondary framework is damaged and the winding is defected; control the tension during winding; check whether the wire ends fall into the secondary coil and whether gloves are worn during the assembly process so as to prevent the coil from being polluted and insulation reduced; the vacuum degree of glue filling, preheating time and temperature of the coil shall be carried out according to the process requirement.

● Air leakage of spark plug cylinder leading to deteriorated rubber head of ignition coil due to high temperature sintering, and poor sealing resulting in electric leakage.

Preventive measures: check whether the rubber head and silicone material of spark plug or ignition wire coil meet the requirements; whether the injection molding (including vulcanization) process (time, temperature, pressure) meet the standards.

By Felix SS YUAN


SCM C19: Cross-border Supply Chain Management in the aftermath of COVID-19 (III)

Let us continue to look at how key processes of cross-border supply chains are impacted by COVID-19.

▍Commercial Negotiation

In the past, RFQs, quotations and commercial negotiations are always handled through emails, phone communications, and most importantly face to face meetings.

With SCM C19, the traditional process is boosted by video-conferencing and when needed local service providers could simultaneously get involved for consultation and coordination online.

▍Quality Control

Pre-shipment Inspection is a vital part of the quality control, especially with new suppliers or new products. When the supplier quality stability is an issue, strict pre-inspections are even more important to buyers.

The standard inspections, including pre-production and in-line inspections, are always done with on-site operations by either the buyers or third-party service providers.

When international buyers are no longer able to personally check the products before shipment, SCM C19 calls on on-site inspections by local service providers, with remote participation by buyers.

Before the inspections, local service providers work with the buyers to jointly determine the acceptance criteria and inspection process, especially product-specific critical inspection points.

Local service providers undertake on-site inspections, make video-recordings of the entire process for online review by the buyers. And inspections or audits of the key processes are also live-streamed by the service providers so buyers can monitor and participate remotely.

▍Warranty handling for complicated technical or quality issues

When handling complicated technical and quality issues, sometimes simply communications by emails or phone calls are simply not sufficient or satisfactory.

With SCM C19, remote handling of complicated technical and quality issues is enhanced by the use of tools such as video-conferencing, and local service providers with technical or quality competence can also assist during the live sessions.

(To be continued)


Cost of raw materials:
Exchange rates:

USD/RMB: 1:6.9646

EUR/RMB: 1:8.1669

RUB/RMB: 1:0.0952

August 2020

The above information is for reference only


We are almost at the end of the summer season. While Chinese factories continue to report normal operations, the coronavirus pandemic is still impacting the world in various places and in various stages. Central and South America, India, and some countries in the Middle East are still suffering from the virus. Several countries in Europe, especially Spain, are seeing a likely second wave.

Many new trends are emerging in the aftermath of the pandemic, and years later people would most likely look back and see this is the year when fundamental changes in our lives and the economic activities have begun. People are not only working more out of home and traveling less but also trying to stay away from large-group activities, especially in closed environment, for both business and leisure. Many business practices have been adapted to deal with the new realities. Companies that have good online presence are definitely benefiting from the trend. Products that are for in-house applications and individual or small-group outdoor activities are seeing exceptionally high demand.

More companies are actively “brainstorming” in new directions, and we are already seeing spare parts businesses across the globe are considering adding new product lines outside the traditional product range.

It would be naïve to expect that things would eventually return to “normal”. The business world simply has to adapt to the new norms post COVID 19.

SHENTOU SUPPLY CHAIN MANAGEMENT CO. LTD. is a Shenzhen, China, based company serving international automotive clients in the implementation of their China strategies and programs. CHINA AUTOMOTIVE SUPPLIER QUALITY MANAGEMENT BRIEFING is a bi-monthly newsletter published by Shentou to address the specific and unique quality challenges and concerns international automotive companies face with suppliers in China. Comments are welcome at Click here to subscribe.

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