Wal-mart Factory inspection
1、 Wal-Mart Factory Inspection Standard Human Rights Review Document
Original copies of the following items must be provided on the day of the audit
Business License
Factory floor plan
Organizational Chart
-Factory regulations and discipline
-Dormitory Discipline Rules
-Employee Handbook
-Individual labor contracts need to be provided, which are clear and acceptable through collective contracts recognized by the government
-Personnel files
Copy of ID card
Personnel file information - including entry date
Leave Application Form
Resignation Letter/Record
Warning letter
-Physical examination report and work license/registration for underage workers aged 16-18
-Local minimum wage documents
-Salary/production records for the past year*
-Time card/attendance record
-Piecework production records and piecework wage calculation records
-Salary calculation records - manual or computer
-Wage slip/salary table with worker signature
-Record of salary deductions/fines
-Work injury accident records
-Insurance - Relevant approvals and receipts for insurance purchases provided by local government departments
-Material Safety Data Sheet
-Record of unexpected events/accidents
-Kitchen/Restaurant Personnel Health Certificate
-Special Equipment License
-Special Equipment Operation License Certificate
-Waste/wastewater discharge permit certificate
-Election procedures for union representatives, union responsibilities, and minutes of union organization meetings
-Factory Building Structure Safety Certificate
-Factory Fire Plan, Emergency Escape Plan
-Structure diagram and/or work procedures of environmental health and safety organization/safety production committee
-Emergency/accident records/sick leave records
-Special type of work personnel operation certificate
-Hazardous inventory list/waste inventory list
-Fire drill records, fire escape procedures
-Machine Safety Operation Training Record
-Chemical Safety Use Training Record
-Medical and First Aid Training Records
-Hygiene/Health Training Record
-Other (depending on the audit situation)
2、 Walmart Audit Process and Procedures
Subcontractors' factories producing the following goods must undergo Ethical Standards audits:
A. Finished product
B. Parts with Wal-Mart logo
C. Products, clothing cleaning, and processing factories that are clearly included in the products sold by Wal-Mart also require an Ethical Standards audit. The supplier is responsible for informing all subcontractors who produce Wal-Mart products.
Note: The supplier should distribute a 'Supplier Standard' poster in English and local language to all factories producing goods for sale by Wal-Mart.
1. Audit arrangement
Direct import supplier:
After the 'Audit Application Form' is accepted, the relevant GP office will proceed with arranging the audit time and arranging auditors to go to the site for audit. Local suppliers in the United States: After the 'Audit Application Form' is accepted, the Ethical Standards department at the headquarters will arrange the audit time and designate a third-party audit agency to conduct the audit on site. Suppliers and factories should consult the Wal-Mart's ES department for relevant matters. Wal-Mart requires third-party auditors to transfer to the Wal-Mart ES department for processing after receiving relevant phone calls from suppliers/factories.
2. Audit implementation: pre audit meeting, factory inspection, employee interviews, factory document review, summary meeting, signing audit report
Audit scope
-The initial and annual audits should be comprehensive audits. Reviewers will review records for at least three months to one year.
-The follow-up audit is mainly based on, but not limited to, the results of the previous audit. The follow-up review also includes a review of salary and working hours.
-The scope of the audit conducted on the factories of direct import suppliers should also include the C-TPAT (Customs Trade Counter Terrorism Alliance) required audit.
Any factory attempting to obstruct or refuse Wal-Mart's designated auditors to enter the factory will result in serious consequences. Read the 'Supplier Standards' and Chapter 6 of this manual in detail. If auditors are unable to enter the factory, they cannot determine whether the relevant factory meets the Supplier Standards. When auditing the factories of local suppliers in the United States, audit fees will be charged. The incomplete or inaccurate contact information of the factory, as well as the lack of understanding of the requirements of the audit and reception personnel by the factory management personnel, can seriously affect the audit deadline. Suppliers should assist factory personnel in understanding the requirements of Wal-Mart's Supplier Standards. When conducting the audit according to the prior arrangement, the responsible person and/or supplier of the factory must be present and sign on the on-site report proposing improvement measures for confirmation. During the audit, there must be a responsible person from the factory present. If the person in charge of the factory is not present, the direct import supplier shall still bear the cost of third-party audit.
3. The entire audit process includes the following activities:
(1) Pre audit meeting
After the auditors arrive at the factory, they first meet with the factory management personnel. Factory management personnel should provide a completed factory survey form. At this stage, the auditors will also verify the factory's business license and confirm the information submitted by the factory one by one.
(2) Factory inspection
After the pre audit meeting, the auditors will conduct an inspection tour within the factory area. In general, auditors only require minimal assistance from factory management when conducting inspections. Only with minimal monitoring can auditors conduct audits in the most effective manner. Of course, the inspection time may vary depending on the size of the factory.
The auditor will have a brief conversation with factory employees in the production area, inquiring about mechanical operations and other issues related to Wal-Mart's Supplier Standards. In addition, auditors may measure space, test whether fire protection equipment and other equipment are in a controlled state, and inspect repair and maintenance records. At the end of the inspection, the auditor will request documents related to personnel, working hours, and salary records. Salary review depends on the size of the factory.
(3) Employee interviews
Employee interviews are an industry standard for evaluating Code of Conduct (Supplier Standards) issues. Wal-Mart believes that understanding employee opinions is an essential part of the audit process. The audit results and findings can be confirmed through such interviews.
Employee interviews should be conducted separately outside the production area. Factory management personnel should provide a separate interview room. During the interview, factory management personnel or their representatives are not allowed to be present. The number of employees interviewed shall not be less than 15, and the maximum number shall not exceed 25, depending on the size of the factory. The interviewees in the interview should be representatives of male and female employees in the factory, selected from different departments within the factory. In addition, it is best to choose employees for key production positions. Usually, auditors will select the interviewees during factory inspections. If any issues are found during the document review process, relevant employees can also be invited to come for an interview at any time.
(4) Review of factory documents
To further ensure the correct implementation and execution of Wal-Mart's Supplier Standards, Wal-Mart or a third party designated by Wal-Mart will take measures such as factory on-site inspections to ensure the correct implementation and execution of the Supplier Standards. Suppliers who fail to pass the factory on-site inspection or refuse to accept the factory on-site inspection or relevant document inspection will face consequences such as immediate cancellation of remaining orders, rejection of goods, return of goods, and termination of business transactions.
(5) Summary meeting
When conducting audits according to pre arranged arrangements, representatives of factory management personnel and/or suppliers must be present and sign on the on-site report proposing improvement measures for confirmation. The reviewers will summarize the audit results together with the factory during the summary meeting, and discuss with the factory management any non-compliance with Wal-Mart's Supplier Standards. The auditor will prepare an on-site report that includes any violations discovered during the audit process and suggestions for improvement measures. During the summary meeting, the auditors will discuss the issues identified in the on-site report and the proposed improvement measures. Factory management and auditors should sign and confirm the on-site report. This ensures that factory management personnel also have a record of issues (violations) and remedial suggestions. Factory management personnel should take measures to address the issues identified in the on-site report. Factory management personnel should submit the prepared Action Plan to the auditors during the follow-up audit meeting. During the follow-up audit, the auditors will confirm the implementation of the measures. Suppliers and/or factories should contact regional offices more frequently and communicate promptly regarding issues and/or suggestions reported on site.
(6) Sign the audit report
3、 Walmart audit result (level) classification
All factories must undergo inspections to ensure that products are produced under conditions that comply with Wal-Mart's Supplier Standards. After the factory is audited, it will be evaluated as a certain audit result (level). The audit results (levels) are divided into the following categories:
GREEN
-If no violations or only low-risk violations are found during the audit, the factory will be rated as Green
-Order can be shipped normally
-Can accept new orders
-If the factory still produces Wal-Mart products one year after obtaining the Green results, it must undergo an annual audit.
YELLOW
-Factories found to have medium risk violations during the audit will be rated as Yellow
-Order can be shipped normally
-Can accept new orders
-The factory will conduct a re audit within 120 days after the evaluation results are released.
ORANGE
-Factories found to have high risk violations during the audit will be rated as Orange
-Order can be shipped normally
-Can accept new orders
-The factory will conduct a re audit within 120 days after the evaluation results are released.
RED
-Any factory found to have serious violations or situations during the audit process will be rated as' red '
-The factory has violations in the following areas: child labor, forced labor, corporal punishment, illegal transportation, discrimination, human rights violations, bribery, and/or unsafe working conditions
-Cancel placed orders
-All orders that have not yet been shipped will be cancelled
-If the full container of goods has been loaded on board, it must be approved by the retail market before acceptance
-If LCL goods have been delivered to the designated LCL carrier, they will be accepted (retail markets that do not agree to accept them should follow the return/claim procedures)
-Unable to accept new orders
Disapproved program
Disapproved should not be confused with ES audit results. This program is mainly used to manage suppliers/factories that do not comply with the new ES regulations and requirements. Suppliers/factories that do not comply and/or cooperate will be classified as such. In this Ethical Standards program, factories that meet the following elements can be listed as Disapproved:
-Obtain a total of four consecutive or cumulative Orange results within two years.
-Direct import supplier: After the supplier's factory receives three Orange results, Wal-Mart will decide whether the next audit will be conducted by a third-party impartial organization designated by Wal-Mart or by the Wal-Mart Ethical Standards department. If a third-party audit is required, the relevant costs of the audit shall be borne by the supplier. The 'Audit Application Form' for third-party audit must be submitted within 90 days of the audit date of the previous audit.
Execution of the Disapproved program
-The cumulative number of Orange results obtained will be pushed back two years from the last audit date.
-When obtaining Orange results for the third time, both the supplier/factory and the Wal-Mart procurement department should be informed of the results. Note: If any audit result results in the factory receiving the fourth Orange result within two years, the factory will be listed as' Disapproved 'from the date of the last audit.
Consequences of being listed as' Disapproved '
-New orders cannot be accepted for at least one year from the date of review
-All purchase orders will be cancelled
-All orders that have not been shipped will be cancelled
-Only accept products that have been shipped
-When the factory is in a 'disapproved' state, new orders cannot be accepted
-New orders can only be accepted after being re reviewed by a third-party auditing agency or the Wal-Mart Ethical Standards department and obtaining a Yellow or Green result.
Disapproved
-The factory must first resolve the issue that caused Disapproved
-Suppliers must submit the 'Audit Application Form' to the local Ethical Standards department at least 30 days before business resumption.
-The factory must undergo a comprehensive audit and obtain a yellow or green result before accepting new orders.
-The document review will include salary records for up to three months and up to one year
-For direct import suppliers, the ES department will determine whether the supplier's factory needs to be audited by a third-party auditing agency or our company's ES department. The ES department has decided to entrust the audit to a third-party audit agency, and the relevant costs of the audit should be borne by the supplier.
-If the factory does not obtain a qualified audit result, it will continue to maintain the 'Disapproved' status
-After the factory is ready for a re audit, the supplier can submit a 'Audit Application Form' again.
Wal-Mart encourages suppliers to develop and improve the factories they use in accordance with Wal-Mart's Supplier Standards.
The performance of the supplier will be evaluated by the following parameters:
-Number of Disapproved factories
-The number of factories that have not been activated due to being listed as Disapproved
-Overall factory performance: Green result factory quantity, Yellow result factory quantity, Orange result factory quantity, Red result factory quantity