Audit of Production Processes

Audit of Production Processes

Production process is defined as a process of making and fabricating by converting the raw material (input) to finished good (output). An audit is the examination, verification, evaluation, assessment, and check activities. Hence, the production process audit can be defined as an activity to evaluate the process of making and fabricating for its effectiveness and efficiency.

A number of external and internal factors play a critical role in the performance and competitiveness of the process. External factors related to the organizational environment which influence the process performance, are as important as the internal factors. The areas to be covered related to the process during the audit of the production process are wide spread. Besides auditing of the technological aspects of the process, production process audit includes (i) production planning and strategy, (ii) various aspects related to the product, (iii) process optimization, (iv) process flexibility, (v) production technology, (vi) emissions and waste generation,  (vii) knowledge and training of the operator , (vi) production system, (vii) performance measurement system, (viii) safety and house-keeping, and (ix) compliance with regulatory norms. All of these areas interact with the production process and determines its effectiveness.

The main objective of the audit of the production process is to improve the performance of the process. This is because of the competitive pressure which the organization faces in marketing of the products. In order to achieve the higher competitiveness level, it is essential for the organization to identify the current level of the process performance as well as the required level so that it can realign the strategies related to various technological and the operational aspects of the production process for the improvement of the quality performance.

Audit is one of the many tools which have been found useful to identify the current performance by diagnosing the opportunities for improvement and plan for improvement action. Audit is a tool with wide spread use and is carried out in several areas of management such as financial, quality, environment, energy, safety, and many other areas. Many times audits are being conducted in order to comply with certain regulatory requirements. In some organizations, the audit is being regarded as an ‘added cost’ activity. Such perception of the organizational management for the audit activity is because the organizational management considers that it is an activity which is not connected with the daily operational activity. This is a defective perception since the audits besides checking compliance also focus towards improving the performance such as product quality, reduction of waste, and cost reduction etc. It is more valid in the case of the audit of the production process when compared with the other types of audits.

The production processes

In an operating plant, there are several production processes which are taking place. Production processes can be simple or complex or can be similar or dissimilar. The production processes are not independent since they functions in conjunction with other processes. In several cases, the output of one process is the input for the subsequent process. Some processes take place in series while the other processes take place in parallel. Also, there are some support processes for the main production process. The organization can be considered a collection of processes to achieve final outputs. Hence, while auditing a production process, it is necessary that the boundary limits of the audit are initially fixed before the start of the audit.

In order to audit a production process, one is to first understand what is meant by the term production process.  A production process is an activity which is based on certain ‘process principles’.  The first principle is that activities of the process are connected or linked. The second principle is that the processes result into the changes which take place within a system. These changes are often called transformation. The third principle is that the law of conservation applies to a defined production process. For the production process to work, inputs to outputs are to follow the law of conservation which means balancing and equilibrium of inputs and outputs. If the process elements are out of balance, the process is in disturbed state. The process is not effective and the process objectives are not achieved. Further, the outputs need certain inputs of the required quality and quantity and if these are not met then the required outputs are not achieved. The fourth principle is that the production processes are to be operated under optimum operating conditions to be efficient and productive. When the processes are not efficient and productive, then they do not meet the performance objectives and are not economical to operate.

A production process transforms inputs into outputs. The transformation or change takes place in a series of activities or process steps which leads to the desired outputs (objective of the process). Proper and systematic planning is essential part of the production process which is to be carried out in an effective manner. The planning includes measurement, monitoring and the control of the process parameters as well as the qualities of the inputs and the outputs.

Besides inputs and outputs, the production process needs facilities in the form of processing equipments, furnaces, handling equipments and implements along with the communication, instrumentation and automation equipments etc. These facilities are required to be properly maintained for efficient operation of the process.  Further, the production process is to be operated by the operators who are to have the training, knowledge, and skills to operate the process and capabilities to take the required decisions in case of the process disturbances. The production process also requires utilities, consumables, and different forms of energies of proper specifications.

The production process needs a culture of safety and occupational health, discipline, and housekeeping at the workplace. It generates emissions as well as the waste products. While the emissions are to be controlled within the regulatory norms, the waste products are to be handled, treated and disposed off following the regulatory norms. Recycling of the waste products is required to be maximized as far as practicable.

The production process is to be controlled to avoid negative consequences. The amount of the level of control varies from process to process depending upon the risk acceptability of the undesirable outcomes. The necessary requirement of a control system is that there is a feedback information loop from the process parameters and output. The feedback information is used to make decisions for the adjustment of the process parameters. This is necessary so that the process converts inputs into the desires outputs in a productive and efficient manner. The feedback information can be in the form of temperature, pressure, size and dimensions, volume, weight, composition, micro-structure, physical and mechanical properties, delays, utilization, yield, and cost etc.

The functions of the feedback loop are is to achieve the process objectives. Management of the control of the activity of a production process is normally carried out based on the establishment of a pre-determined method. Pre-determined methods can include plans, procedures, work instructions, check-lists, outlines, diagrams, flow charts, and process maps etc. Feedback information is to relate to the process performance criteria and / or process objectives.

Production process audit

During the  audit of the production process, study and analysis is carried out with respect to seven attributes of the process namely (i) effectiveness of the process technology for the desired product, (ii) process efficiency, (iii) process productivity, (iv) process availability, (v) process reliability, (vi) compliance with regulatory norms, and (vii) safety and hazards related issues. The main purpose of the audit is to identify the areas of the production process which are preventing the process to function at the desired level with respect to the seven attributes.

The audit of the production process is an audit against the agreed upon boundary limits and the audit requirements. During the audit of the production process standard auditing techniques are used. The audit is normally undertaken to verify whether the production process is operating within the specified limits and achieving the specified targets. The audit of the production process examines the process from inputs to the outputs and evaluates all the sequential process steps and the interactions of these steps with each other and with the overall system. While conducting the audit, the auditor follows the terms as being used in the organization for the production process.

Production process auditing provides value by evaluating the process, its controls, its risks, and the achievement of the objectives. Production process audit can also be used to troubleshoot the process problems. The audit process normally follows four steps namely (i) planning and preparation, (ii) freezing of the definition of audit objectives and scope, (iii) evidence collection and evaluation while conducting of the audit, and (iv) documentation and reporting (Fig 1). During the audit, the documents and the records of the production process are reviewed and key issues related to the process are identified. These are cross checked during the inspection visit of the facilities.

Fig 1 Steps in the audit process

Systematic approach to the auditing is the first element for the success of the production process audit. The systematic audit program includes initiation of the audit, preparing for on-site audit, conducting the on-site audit, report preparation and follow-up activities. The follow-up activities in this context are the checking of improvements activities which have resulted from the audit finding.

The second element for process audit covers more than the manufacturing process. It includes all supporting process which contributes to the effectiveness of the process. Series of inter-related audits outweigh the single performance audit. It is often suggested that the audit to cover the overall system which include policy making, product design, process management and all issues related to the production process. The audit normally loses its focus on the production process improvement if the audit covers too much on overall management system and strategic management of the process. The strategic management is to be derived based on the weaknesses identified during the audit. Specific areas are required to be investigated in production process audit so that the audit can focus on quality performance.

The conceptual framework for the production process audit is shown in Fig 2. It has been developed from audit program management and process approach audit. The process approach audit focuses on the process definition, process structure and its interface with the connected processes. In the conceptual framework, the focus is on the sequence of the production process and its interaction with other supporting processes and the production process elements. In the framework of the process audit, the main priority in the production process is the performance measure indicators. Without the proper identification of the performance indicators, the performance of the process cannot be measured and the process effectiveness and efficiency are evaluated subjectively. Tools, techniques and best practice can be shared in term of infrastructure used, locations, supplier management, internal and external logistic, human resource, procedures, occupational health and safety, social responsibilities, and financial since these support either directly or indirectly towards effectiveness and efficiency of the production process.

Fig 2 Conceptual process audit framework

e conceptual framework divides the production process into seven elements, which are the effective supply (input materials), output materials, facilities (with what), work force (with whom), process operation (how), support process (management system) and performance measurement indicators for the output and related process (by what). All this process elements can be bench-marked and opportunities of improvement or weaknesses (audit findings) can be identified.

Typical process audit problems or failures are due to lack of audit preparation, audit criteria elements, auditor skills and knowledge, commitment from the management, and bureaucratic reporting.

The audit starts with the examination of the procedures being followed and the process parameters being monitored for the control of the process for their adequacy. For this the approach of the auditor is to follow the process sequence instead of checking in an isolated manner.

The auditing process is normally carried out by verifying element by element to verify conformance to the requirements. This is called the elemental method. Auditing by elements is an effective method for tracing requirements but it does not consider the inputs, outputs and interacting activities with the connecting processes and hence it is less effective overall.

Key guidelines for the audit of the production process

Key guidelines for conducting the audit of the production process are described below.

Production process audit starts with the preparation for the audit which includes identification of the production process audit tasks. These tasks include type and scope of the audit and the time frame available for conducting the audit. For effectively performing the tasks within the available time frame, the auditing team is organized along with the identification of the regulatory requirements and the applicable standards. Production process audit is launched with the identification of the boundary and units which are needed for the production process audit and the tasks are allocated to the team members.

The audit checklist helps the auditor to conduct the work in a systematic and consistent way. The checklist is to include (i) steps to be taken during the production process audit, (ii) data and information which are required to be collected, (iii) existing measurement methods and the data being recorded, (iv) required measurements during the production process audit and the list of the parameters to be measured, (v) major processes and / or equipment to be assessed in more detail, (vi) list of main components of the results section of the audit report to be used for guidance, and (vii) other major concerns and considerations with respect to the production process.

The first and important step in the production process audit is the collection of the data. The data include information about the production process, its input materials, its main products, its production capacity, specific consumptions, energy mix and key utilities, and waste generation etc. The information regarding management controls in the production shop including organizational structure and the number of employees, management positions for the process and responsibilities, process management documentation need to be known to the audit team. The data for collection is also to include details of the production process including its technological characteristics, flow sheets and capacities, important drawings including the layouts, key parameters being measured and monitored, equipment type, size, and capacity, inventory of equipment, previous monthly and annual reports related to the process showing production, productivity, consumptions of raw materials, energy, utilities and consumables, delays and the product quality etc., product quality details, and other information as necessary for the process  evaluation.

While carrying out the production process audit, a visit to all the areas related to the production is to be made by the audit team to have first hand assessment of process stability, equipment health, storages of fuels and raw materials, safety and housekeeping, emissions, waste heat recovery, and solid waste handling etc. Audit is also carried out on the production and maintenance management system being practiced presently for the production process. During the audit, status of the instruments and control equipment used for the process control and data transmission and collection is to be checked with respect to their working, calibration and accuracy. A visit to the quality control laboratory is normally made during the audit to have the first hand information about the quality related data being monitored and the facilities available at the quality control laboratory.

The methods adopted for production process audit are based on the principles of material balance as well as energy and of mass conservation. The theory of system engineering is used for the comprehensive closed audit of the input and output in the production process. Each factor or link which affects the levels of material consumption and energy consumption of the production process is analyzed quantitatively, thereby finding out the problems of material wastage and the potentials for yield improvements and reduction of the specific consumptions. The causes are analyzed for putting forth the relevant recommendations regarding measures of rectification needed for the definite purpose of yield improvements and reduction of the specific consumptions.

The collected data and the information obtained during the visits to different places by the audit team are analyzed using various statistical analysis tools. This analysis is done in order to identify the areas which need improvements. This analysis is also to bring out the various parameters of the production process, areas where performance is lacking when compared with the industry norms and areas where improvement potential exists with the existing technology being used in the plant. The data analysis is also to bring out the areas where substantial improvements can be achieved through investments in the new equipment and technologies. The data analysis is also to bring out the key factors which impact the performance of the production process.

The main objective of the production process audit is the making of the recommendations for the improvements. Normally, during the auditing of the production process, the most important components for the audit are process productivity, specific consumptions, and the product quality because these directly relates to the process performance and indicates how much there is, potential available for improvement and cost savings.

The report of the production process audit is to include (i) description of related items of the production process, (ii) general description of the connected processes highlighting the areas which connects the process with the production process, and the present status of the production process, (iii) the findings of the production process audit which include the evidence and the necessary calculations and analysis of the observed parameters, (iv) the test results of the product sample test carried out in the laboratory, observed specific consumptions of materials, energies, utilities and consumables, production panning and related  data, breakdowns and related data, (v) analysis on the existing problems and improvement potentials (vi) the economic and technical analysis and evaluation of the new technologies for the production process which are recommended for adoption in the plant, and (vii) conclusion of the production process audit  and the relevant recommendations on rectification.

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