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 1st – Year
Department of Pharmaceutics
Pharmaceutical Regulatory Affairs Group
JSS College of Pharmacy, Mysuru
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2.  Contents:-
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 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.
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4.  These audits can be done on-site by reviewing the processes or even
off-site by reviewing documents submitted by the supplier
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 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…

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 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…

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 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:
2) Approving a
new supplier for
sourcing of
current parts or
commodities
•3) Exploring
alternate
sources of parts
during a cost
reduction effort
1) Developing a
new product and
determining
sourcing for sub-
components

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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.

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 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.

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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:
1 • Preparation
2 • Performance
3 • Reporting
4 • Follow-up and Closure

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Preparation
Develop an audit plan prior to the visit :-
• A good plan keeps the auditor or auditing team focused on the objectives,
saves time and produces superior results.
Plan for who will attend the audit :-
• If a team is going, select a lead auditor to delegate the various assignments,
process, documentation and areas to be audited. It is a good practice to
develop a checklist of items to be covered and tasks to be completed.
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• Take time to review available information regarding the organization to be
auditor.
Other Information:-
• Audits involving current suppliers may include a review of available product or
process documentation on file. For any reported non-conformances determine
what corrective actions were taken and verify that the problem is not still
occurring.
Take time to review :-

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Performance :-
Proper Communication :-
1
• The communication should be open and honest between the auditor and the
auditee. Holding a brief opening meeting with appropriate members of the
organization is an effective action for yielding good communication. Make
sure everyone is familiar with the process, what is going to occur during the
audit and field any relevant questions.
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Checklist:-
2
• During the performance of the audit follow your checklist. Be sure to cover all
the areas that were planned ahead of time. Be thorough, ask questions and
write down all your findings. When reviewing a process ask open ended
questions and let the auditee explain the process to you to determine their
knowledge level of the process.

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Review the process:-
3
• Review the process documents on the line: are they legible, readily available
to the operators and if you are auditing a multi-lingual organization, are the
documents written in the appropriate languages?
• In addition, review the process control documents and ask “what if” questions
to determine how well the process is actually being controlled.
• It is also good practice to observe the flow of raw materials and product
through the facility.

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Examine the Storage area:-
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• Examine the storage areas: are they neat and orderly, is product easy to
locate? Determine how well non-conforming raw material or product is being
managed, including how it is identified and where it is stored.
• Determine if there is a clearly marked hold area for any non-conforming
product.

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Observe the cleanliness and orderliness of the
facility:-
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• During the audit observe the cleanliness and orderliness of the facility. Determine if
there is any type of 5S process in place and if it is being followed. Make
observations and ask questions and take plenty of notes.
• Document any evidence of non-conformity uncovered during the audit and always
inform the auditee of your findings. Share what will be reported and assure them
that the intent of the audit is to improve the process.
• If evaluating a new supplier you may inquire as to their capacity and ability to meet
future demands.

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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)

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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.

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 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.

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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.

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 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.

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 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.
 Minimize 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.

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 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.
 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.

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 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.

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 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.

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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 Organizations and quality management
systems.
• ISO 9001:2015 promotes a Process approach in order to produce the sought
after quality outcomes.
 Requirements of ISO 9001 :-

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• Present requirements for Quality performance in the organization’s
strategic planning.
• Greater emphasis on Top level management for ownership of the QMS.
• Less prescriptive requirements compared to previous versions
• The main focus is on Customer satisfaction
• Straightforward Terminology throughout the standard

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 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.

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 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.

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 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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 Quality Management Principles :-

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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.

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 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.

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 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.

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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.

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 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 activities are understood and managed as interrelated
processes that function as a coherent system.

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 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.

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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.

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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.

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 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

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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.

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 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.

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 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

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