Second Party Audit and External Third Party Audit

Second Party Audit:- Second-party audit is when a company performs an audit of a supplier to ensure that they are meeting the requirements specified in the contract.

External Third Party Audit:-
A third-party audit occurs when a company has decided that they want to create a Quality Management System (QMS) that conforms to a standard set of requirements, such as ISO 9001 and hire an independent auditing company to perform an audit to verify that the company has succeeded in meeting these standards.

1. Submitted by:- Mr. Shantanu S. Thakre M-Pharm 1 st – Year Department of Pharmaceutics Pharmaceutical Regulatory Affairs Group JSS College of Pharmacy, Mysuru Second Party Audits & External Third Party Audits 1

2. Contents:- 2 What is Second Party Audits? Why perform Second Party Audits? How to perform Second Party Audits? Benefits. What is External Third Party Audits? What is the meaning of ISO 9001 certification? What is QMS certification? QMS Principles

3. What is Second Party Audits? A second-party audit is when a company performs an audit of a supplier to ensure that they are meeting the requirements specified in the contract. These requirements may include special control over certain processes, requirements on traceability of some parts of the service, requirements for specific documentation or records . 3

4. These audits can be done on-site by reviewing the processes or even off-site by reviewing documents submitted by the supplier 4 The customer can audit all or part of the contract. There often is a contract involved between the customer and supplier specifying the terms of delivery, pricing, packaging, quality requirements and various additional terms. Many people think that second-party audits would not be necessary once a certification body certifies a company, but this is not necessarily true. Cont …

5. 5 Even if a third-party audit certifies you, any of your customers may still want to perform a second-party audit to look at elements of their contract, especially if these elements are not the same or sufficiently covered by the requirements set out in the standards the company has certified to . This is not required by all customers, and is not required to be certified body by a certification body, but it is specified in some contracts and there are some customers that choose to perform these audits Cont …

6. 6 Why Perform Second Party Audits? Performance of 2nd Party audits can result from various circumstances. An external audit may be performed when an organization is: 1) Developing a new product and determining sourcing for sub-components

7. 7 4) Investigating a quality issue with the supplier’s product. 5) Confirming completion of corrective actions from a past quality issue. 6) Performing a review or maintenance audit as part of a supplier management process.

8. 8 General Information:- The 2nd party audit is a valuable tool for strengthening a company’s supply chain through verification that all current and future suppliers meet or exceed pre-determined requirements. One of the primary objectives of a rigorous supplier audit system is to prevent any quality issues from reaching your customer In addition, the audit can be used to assure the supplier can deliver the quantities of parts to meet demand. A well planned 2nd party or supplier audit system helps assure that quality parts are received on time and every time.

9. 10 How to Perform 2nd Party Audit The 2nd party audit is almost always planned and announced ahead of time. The date and time for the visit, the length of time expected to perform the audit and what areas will be covered are generally agreed upon in advance. There are four main sections or phases of a 2nd party audit: 4 Follow-up and Closure

10. 11 Preparation 1

11. 12 Take time to review :-

12. 14 Performance :- 2

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17. 17 The 5S list is as follows: Sort: Separating of the essential from the nonessential items Straighten: Organizing the essential materials where everything has its place Shine : Cleaning the work area Standardize: Establishing a system to maintain and make 5S a habit Sustain: Establishing a safe and sanitary work environment (Safety)

18. 19 3 Reporting :- The report is an organized compilation of the audit findings and observations.  The auditor or lead auditor should lead the meeting and share the audit report.  When audit teams are involved, each member should speak to any findings or observations from the area they covered.  Sufficient time should be allotted for the auditee to ask questions. The auditor should clarify any areas of disagreement.

19. 20 The auditor should then deliver a brief outline of the findings and observations including a review of recommended actions to address any non-conformances discovered during the audit. In addition, always review any possible opportunities for improving the process. Recommended actions to address and correct nonconformities are very common.

20. 21 4 Follow-up and Closure :- The auditor and auditee should then discuss and agree upon an appropriate timeline for completion of any corrective actions or improvements identified during the audit. Appropriate action must be taken to eliminate any causes to prevent re-occurrence. Corrective action is about eliminating the causes of problems and not just following a series of problem-solving steps.

21. 22 A follow-up audit is often discussed and scheduled based on the timeline. The audit is considered complete once all planned activities have been finalized.

22. 23 Benefits With Second-Party supply chain audits :- Validate the strength of your supply chain against requirements. Assure that supplier’s goods and services are compliant with all requirements. M inimize the risk of product failures, product recalls, and other compliance issues. Reduce the risk of your company’s liability with documented safety standards. Protect the reputation of your organization.

23. 24 External Third-Party Audit :- A third-party audit occurs when a company has decided that they want to create a Quality M anagement S ystem (QMS) that conforms to a standard set of requirements, such as ISO 9001 and hire an independent auditing company to perform an audit to verify that the company has succeeded in meeting these standards. These independent companies are normally known as Certification bodies , (e.g. Integrated Quality Certification Pvt. Ltd) and they are in the business of conducting audits to compare and verify that the QMS meets all the requirements of the chosen standard, and continues to meet the requirements on an ongoing basis.

24. 25 They then provide certification to companies that they assess as having achieved the standard. This can be used to give customers of the certified company confidence that the QMS meets the requirements of the chosen standard.

25. 26 What is the meaning of ISO 9001 certification? For a company:- This means that they can advertise that, external auditors have confirmed that they meet all of the requirements of the ISO 9001 standard and therefore, their QMS meets these world-class requirements. ISO 9001:2015 has become the international standard for quality assurance in business organizations. For individuals:- An ISO 9001 certificate means that they have gained the knowledge required to implement or audit an ISO 9001:2015 QMS, and that they can apply this knowledge within the Quality Management System.

26. 27 ISO 9001 is explained in detail above. It is the most recent version of the standard which included several  changes from ISO 9001:2008  including: Adaption/adoption of the new ISO structure to align with other standards including  ISO 14001 ,  ISO 45001 , etc. Enlarging the relationship between  O rganizations  and quality management systems. ISO 9001:2015 promotes a  P rocess approach   in order to produce the sought after quality outcomes. Requirements of ISO 9001 :-

27. 28 Present requirements for  Q uality performance   in the organization’s strategic planning. Greater emphasis on  T op level management   for ownership of the QMS. Less prescriptive requirements compared to previous versions The main focus is on  C ustomer satisfaction Straightforward  T erminology  throughout the standard

28. 29 How do you get an ISO certification? ISO 9001 company vs individual certification. For a company:- The certification process for a company involves implementing processes to meet all of the requirements in the ISO 9001:2015 standard, and then having an external certification body audit and confirm that all requirements are met. This includes a focus on customer satisfaction and meeting regulatory requirements. For an individual:- For an individual, the certification process involves taking certain training courses, which usually includes passing a written test.

29. 30 What is QMS certification? A Quality Management system is a collection of business processes focused on consistently meeting customer requirements and enhancing their satisfaction. After implementing the ISO 9001 requirements, the company must maintain the Quality Management System for a length of time. During this time, company personnel must conduct internal audits and at least one management review of the system. After this, certified lead auditors from a certification body will assess the system against the requirements for ISO 9001.

30. 31 If the ISO 9001 certification company deems that the system meets the standard, and all of the ISO 9001 certification requirements are met, then an ISO 9001 certificate will be issued showing that the company’s QMS is acceptable to meet the standard. The company is then considered to be ISO 9001 certified.

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32. 33 Quality Management Principles :-

33. 34 1) QMP Customer Focus:- Statement The primary focus of quality management is to meet customer requirements and to strive to exceed customer expectations. Actions you can take Understand customer’s current and future needs and expectations. Communicate customer needs and expectations throughout the organization. Measure and monitor customer satisfaction and take appropriate actions.

34. 35 Key Benefits Increased customer satisfaction. Enhanced reputation of the organization Increased revenue and market share 2) QMP Leadership:- Statement Leaders at all levels establish unity of purpose and direction and create conditions in which people are engaged in achieving the organization’s quality objectives.

35. 36 Actions you can take Communicate the organization’s mission, vision, strategy, policies and processes throughout the organization. Establish a culture of trust and integrity. Ensure that leaders at all levels are positive examples to people in the organization. Key Benefits Increased effectiveness and efficiency in meeting the organization’s quality objectives. Better coordination of the organization’s processes.

36. 37 3) QMP Engagement of people:- Statement Competent, empowered and engaged people at all levels throughout the organization are essential to enhance its capability to create and deliver value. Action you can take Communicate with people to promote understanding of the importance of their individual contribution. Promote collaboration throughout the organization. Conduct surveys to assess people’s satisfaction, communicate the results, and take appropriate actions.

37. 38 Key Benefits:- Improved understanding of the organization’s quality objectives by people in the organization and increased motivation to achieve them. Enhanced trust and collaboration throughout the organization. Increased attention to shared values and culture throughout the organization. 4) QMP Process approach:- Statement Consistent and predictable results are achieved more effectively and efficiently when activitie s are understood and managed as interrelated processes that function as a coherent system.

38. 39 Actions you can take Define objectives of the system and processes necessary to achieve them. Establish authority, responsibility and accountability for managing processes. Manage risks that can affect outputs of the processes and overall outcomes of the quality management system. Key Benefits Enhanced ability to focus effort on key processes and opportunities for improvement. Consistent and predictable outcomes through a system of aligned processes.

39. 40 5) QMP Improvement:- Statement Successful organizations have an ongoing focus on improvement. Action you can take Educate and train people at all levels on how to apply basic tools and methodologies to achieve improvement objectives. Ensure people are competent to successfully promote and complete improvement projects. Track, review and audit the planning, implementation, completion and results of improvement projects.

40. 41 Key benefits Improved process performance, organizational capabilities and customer satisfaction. Improved use of learning for improvement. Enhanced drive for innovation. 6) QMP Evidence-based decision making:- Statement Decisions based on the analysis and evaluation of data and information are more likely to produce desired results.

41. 42 Actions you can take Determine, measure and monitor key indicators to demonstrate the organization’s performance. Ensure that data and information are sufficiently accurate, reliable and secure. Make decisions and take actions based on evidence, balanced with experience and intuition . Key Benefits Improved decision-making processes Improved assessment of process performance and ability to achieve objectives

42. 43 7) QMP Relationship Management:- Statement For sustained success, an organization manages its relationships with interested parties, such as suppliers. Action you can take Determine relevant interested parties (such as suppliers, partners, customers, investors, employees, and society as a whole) and their relationship with the organization. Measure performance and provide performance feedback to interested parties, as appropriate, to enhance improvement initiatives.

43. 44 Establish collaborative development and improvement activities with suppliers, partners and other interested parties. Encourage and recognize improvements and achievements by suppliers and partners. Key Benefits Enhanced performance of the organization and its interested parties through responding to the opportunities and constraints related to each interested party . A well-managed supply chain that provides a stable flow of goods and services .

44. 45 References:- https://q-audit.com.au/differences-third-party-second-party-first-party-audits/ https://quality-one.com/auditing/2nd-party/ https://advisera.com/9001academy/iso-9001-certification/ https://www.iso.org/iso-9001-quality-management.html https://the9000store.com/what-are-iso-9000-standards/what-is-iso-9001/ https://www.iso.org/files/live/sites/isoorg/files/store/en/PUB100080.pdf

45. 46 Thank You !