Comprehensive Guide to SMETA Audits: How to Get Your Factory Onboard

You’ve finally done it. After months of hard work and back-and-forth negotiations, your product range has been approved by your customer/ major retailer. It’s an exciting step forward, but now comes the next challenge: getting your factory on board for the SMETA (Sedex Members Ethical Trade Audit) that your customer requires.

You know this isn’t just about ticking a box; it’s about ensuring that the entire supply chain meets the ethical and compliance standards that reflect your brand’s values.

But here’s the thing: convincing your factory to go through the audit isn’t always straightforward. You might be asking yourself, “How do I even approach this conversation?” and “Who usually foots the bill for this audit—my brand or the factory?”

These are real concerns many brands face, especially when navigating the complexities of ethical compliance for the first time. In this article, we’ll explore how to work with your factory to get the SMETA audit done, share insights on who typically pays for it, and provide tips to make this process smoother for everyone involved. By the end, you’ll be equipped with the knowledge to handle this critical part of your compliance journey with confidence.

Why SMETA Audits Matter

Before diving into how to get your factory on board, let’s take a moment to understand why SMETA audits are so important. Retailers often require these audits to ensure that the products they carry are made in facilities that meet ethical labour standards, prioritise health and safety, follow environmental regulations, and uphold business ethics.

For your brand, a SMETA audit isn’t just about compliance—it’s about building trust with your customers and solidifying your brand’s reputation as ethical and responsible.

In 2024, Shein found cases of child labour and wage violations in its supply chain, highlighting the need for transparent auditing.

How to Get Your Factory to Agree to a SMETA Audit

So, how do you bring up the conversation with your factory? This can feel tricky, especially if you’ve built a good working relationship and don’t want to come off as overly demanding. Here’s how to approach it:

1. Start with Transparency: Be upfront about the reasons for the audit. Share that this requirement is coming from your customer (the retailer) and explain how it benefits both your brand and the factory. You can say something like, “This audit is important because it not only helps us meet our customer’s standards, but it also opens up new business opportunities for us and can even highlight areas for improvement in the factory.”
2. Highlight the Mutual Benefits: Explain to the factory how the audit can actually work in their favour. A successful SMETA audit can make them a preferred supplier for other brands, helping them attract more business in the long run. Framing it this way shifts the narrative from “just another requirement” to a potential growth opportunity for the factory.
3. Provide Support: Offer to assist them in preparing for the audit. This could include sharing resources about what the SMETA audit entails, providing guidelines on the documentation they might need, or even walking them through the process step-by-step. This gesture shows that you’re invested in their success, not just focused on meeting customer demands.
4. Offer Flexibility: Understand that audits can be time-consuming and potentially disruptive. Ask the factory when it would be most convenient for them to undergo the audit and be flexible with scheduling. This approach shows respect for their operations and can help ease concerns.

What Does a SMETA Audit Involve?

A SMETA audit covers four main pillars: Labour Standards, Health & Safety, Environment, and Business Ethics. Each of these pillars includes specific checkpoints and requirements that the factory must meet. Here’s a deeper dive into what auditors typically inspect:

1. Labour Standards

• Employment Practices: Auditors examine employment contracts to ensure they comply with local labour laws. They check for signs of forced labour, child labour, discrimination, and unfair wage practices.
• Working Hours and Wages: Review of time records and payroll documents to verify that workers are paid fairly and accurately for all hours worked, including overtime. Auditors check if workers receive at least the minimum wage and whether overtime rates are appropriately applied.
• Freedom of Association: Inspect whether workers have the right to form or join trade unions and bargain collectively without facing discrimination or repercussions.
• Common Failures: Factories often fail in this area due to excessive overtime, inadequate rest days, or underpayment for overtime work. In some cases, factories may not maintain accurate time records, making it difficult to verify compliance.

2. Health & Safety

• Workplace Safety: Auditors conduct a physical inspection of the facility to identify potential hazards. This includes evaluating machine safety (e.g., presence of guards and emergency stop buttons), chemical storage, and emergency preparedness (e.g., fire exits, alarms, and evacuation procedures).
• Personal Protective Equipment (PPE): Check if workers are provided with and use necessary PPE, such as gloves, earplugs, or masks, based on their job functions. Proper training on PPE usage is also assessed.
• Facility Conditions: Inspect sanitary conditions, including access to potable water, clean toilets, and adequate lighting and ventilation.
• Common Failures: A lack of PPE, missing or outdated safety certifications (e.g., pressure vessel inspections), poor chemical storage practices (e.g., missing Material Safety Data Sheets), and blocked fire exits are frequent points of non-compliance.

3. Environment (4-Pillar Audits Only)

• Environmental Management: Auditors assess whether the factory has a documented environmental policy and an assigned environmental specialist. This includes checking for procedures to minimise waste, energy use, water consumption, and pollution.
• Compliance with Regulations: Review if the factory maintains an environmental legal register and stays updated with changes in environmental laws. The factory should have permits for waste disposal, emissions, and other regulated activities.
• Common Failures: Factories often struggle with a lack of trained environmental specialists, outdated environmental legal registers, and missing permits or documentation for waste disposal and emissions control.

4. Business Ethics

• Confidentiality and Anti-Bribery: Auditors check if the factory has policies and training programs related to intellectual property protection, confidentiality agreements, anti-bribery, and corruption prevention.
• Common Failures: Many factories fail in this area due to the absence of formal policies, lack of staff training on business ethics, or inadequate measures to protect intellectual property.

Who Typically Pays for the SMETA Audit?

Now, let’s tackle the money question. When it comes to paying for the audit, there isn’t a one-size-fits-all answer, but here’s the common trend in the industry:

• Factory-Paid: In many cases, the factory covers the cost of the SMETA audit. This is especially true if they are already supplying other brands that require similar audits. If the factory is familiar with the SMETA process, they might even view the cost as a routine part of doing business, similar to maintaining quality certifications.
• Brand-Paid: Some brands choose to pay for the initial audit, especially if they’re working with a factory that hasn’t gone through this process before. This can be a good faith gesture to show your investment in a long-term partnership. After the initial audit, you can discuss a cost-sharing arrangement for future audits or suggest that the factory take on the costs as part of their regular compliance practices.
• Shared Costs: Some brands and factories opt for a shared-cost model. This approach can be particularly effective if both parties view the audit as a mutually beneficial exercise. Sharing the costs can ease the financial burden on the factory while still ensuring that the necessary compliance standards are met.

Tips for a Smooth SMETA Audit Process

1. Set Clear Expectations: Make sure both your brand and the factory understand what the SMETA audit will cover, how long it might take, and what kind of documentation will be needed. Setting expectations early on helps reduce stress and confusion down the line.
2. Offer Resources: Share guides or tools that explain the SMETA audit in detail. This can include the areas the audit will assess, what the factory should prepare, and how they can address any non-compliance issues. Knowledge is power, and providing resources shows that you’re in this together.
3. Communicate Regularly: Keep open lines of communication with your factory throughout the process. Check in periodically to see if they need support or have any questions. A collaborative approach fosters trust and shows that you’re not just outsourcing responsibility, but are actively engaged in achieving a successful audit.
4. Leverage Tools for Compliance: Consider using compliance management platforms like SupplyScope to streamline this process. With features like supplier onboarding, automated compliance checks, and document management, platforms like SupplyScope can take a lot of the guesswork out of audit preparation.

What Happens After the Audit?

After the audit, the factory will receive a Corrective Action Plan (CAP) if any non-compliance issues are identified. This plan outlines steps to address these issues and improve their practices. As a brand, your role is to support the factory in implementing these actions, ensuring they meet the standards required by your customer.

This is also a good time to discuss future audits and the ongoing compliance process. Talk openly with your factory about how they can continue meeting standards, and what the cost and logistics of future audits might look like. By having this discussion early, you set a foundation for a sustainable partnership built on trust and mutual benefit.

Navigating the SMETA Audit Journey

Getting your factory to undergo a SMETA audit is a crucial step in ensuring compliance and aligning with your customers’ ethical requirements. While the process can seem daunting, approaching it with transparency, support, and a collaborative mindset can make all the difference. Whether it’s discussing who pays for the audit, highlighting the benefits to the factory, or offering hands-on help during the preparation phase, your role is to lead this journey with empathy and clarity.

Remember, it’s not just about meeting a customer’s requirement—it can be about building a supply chain that embodies your brand’s values and earns the trust of consumers.

With the right approach, the SMETA audit can become more than a compliance check; it can be a catalyst for positive change and a stepping stone to greater business opportunities.