Introductive Module - Quality Audit Internal Training

Internal training for quality audit of subcontractors

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INTRODUCTION MODULE

Module d'introduction

Welcome to the first module of the training on the quality audit of subcontractors.

This module will cover the following topics:

• Understanding the objectives of a quality audit as well as the roles and responsibilities of each party (LVMH Beauty, Lead Maison, other Maisons);
• How to initiate contact with the subcontractor to be audited and know which documents need to be shared;
• Adopting an appropriate attitude as an LVMH Beauty quality auditor;
• Starting and closing a quality audit.

At the conclusion of this module, you will have a fundamental understanding of quality audits at subcontractors and you will be able to assess your knowledge through a quiz. Successfull completion of this module is essential to access the next module, which will be conducted in person.

INTRODUCTION MODULE

Training structure

As a reminder, the internal training on the quality audit of subcontractors is divided into two parts:

• A theoretical part, with 3 training modules, including 2 e-learning modules;
• A practical part, with the completion of two quality audits.

THEORETICAL PART

PRACTICAL PART

Qualified Auditor = theoretical part + practical part validated by the participant

INFO

INFO

To remain qualified, you must complete at least one quality audit per year at a subcontractor for LVMH Beauty. The list of qualified auditors will be updated annually by LVMH Beauty.

INTRODUCTION MODULE

Before continuing with this training module, make sure to meet the following prerequisites:

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INTRODUCTION MODULE

1/ OBJECTIVES OF A QUALITY AUDIT

INTRODUCTION MODULE

Why to conduct quality audits?

1/ OBJECTIVES OF A QUALITY AUDIT

All cosmetic products, whether manufactured internally or by a subcontractor for LVMH Beauty Maisons, must comply with current regulations. In addition to adhering to the Good Manufacturing Practices (GMP) defined by the ISO 22716:2007 standard, each product must be developed and manufactured in accordance with the specific requirements of the markets where it is sold. This includes, for example, compliance with the CSAR regulation for China. To ensure that subcontracted products throughout the production chain meet LVMH Beauty's regulatory, quality, and safety requirements as defined in the Subcontractor Quality Agreement LVMH (BDIV-QD-011), LVMH Beauty conducts on-site audits of its key partners. To optimize resources and focus on priorities, quality audits are planned annually and pooled through a shared audit service. The selection of key partners to be audited is based on a risk analysis. Audits are conducted using a common framework that incorporates the requirements of ISO 22716:2007, CSAR, and industrial hygiene. This framework ensures a consistent and comprehensive approach to evaluate subcontractor compliance.

INTRODUCTION MODULE

2/ ROLES AND RESPONSIBILITIES

INTRODUCTION MODULE

Quality Audit: Role of LVMH Beauty

2/ ROLES AND RESPONSIBILITIES

LVMH Beauty plays a central role in coordinating the shared audit service. Its responsibilities include:

• Audit planning: LVMH Beauty develops an annual audit schedule based on a risk analysis to identify key partners to be audited as a priority. LVMH Beauty keeps the Maisons informed throughout the year about upcoming audits.
• Mandating auditors: LVMH Beauty selects and mandates internal and external auditors responsible for conducting the audits.
• Communication with subcontractors: LVMH Beauty sends an information letter to subcontractors to inform them of their inclusion in the audit program for the upcoming year.
• Sharing audit reports: After the audit is conducted, LVMH Beauty is responsible for sharing the audit report with the concerned subcontractor on behalf of all Maisons.
• Management of the "LVMH Beauty Quality Blacklist": LVMH Beauty is responsible for maintaining the blacklist of subcontractors who have received an audit score below 50%.

INTRODUCTION MODULE

Quality Audit: Role of the Auditor

2/ ROLES AND RESPONSIBILITIES

As a qualified internal auditor, you may be mandated by LVMH Beauty to conduct an audit at a subcontractor, which could be a subcontractor of your Maison or another LVMH Beauty Maison. The Lead Maison for the audit you are mandated for could be your Maison or another LVMH Beauty Maison. In both cases, your responsibilities are as follows:

Before the audit: Share the necessary documents for audit preparation: During the audit: If an audit has already been conducted at this subcontractor, you must pay close attention to the corrective actions implemented by them following the previous audit.

• Quality Audit Prework for Lead Maison (BDIV-QD-005)

• Subcontractor Quality Audit Prework (BDIV-QD-004)

• Quality Audit Agenda (BDIV-QD-006)

INTRODUCTION MODULE

Quality Audit: Role of the Lead Maison

2/ ROLES AND RESPONSIBILITIES

The Lead Maison plays a crucial role in ensuring the smooth execution of the quality audit at a subcontractor. Its main responsibilities are as follows:

• Audit preparation: Complete the preparatory document provided by the auditor, to give important contextual information about the subcontractor and the subcontracted products.
• Audit review: Carefully review the audit grid completed by the auditor after the audit to understand the findings and areas for improvement.
• Follow-up on the Action Plan: Ensure rigorous follow-up on the corrective action plan proposed by the subcontractor in response to the discrepancies identified during the audit. The Lead Maison acts on behalf of all LVMH Beauty Maisons in this follow-up. It must also share the follow-up of this action plan during the quarterly Subcontracting Quality Coordination Meeting.
• Document archiving: Record all relevant documents related to the audit, such as preparatory documents, the audit grid, the action plan, and evidence of its implementation, on the SharePoint

LVMH Beauty - Subcontracting Quality.

INTRODUCTION MODULE

Quality Audit: Role of other Maisons

2/ ROLES AND RESPONSIBILITIES

Even if they are not designated as the Lead Maison for a specific audit, the other LVMH Beauty Maisons have important responsibilities to ensure the effectiveness of the shared audit system. Indeed, it is important that they:

• Stay informed: The Maisons must keep themselves updated on the audits planned for the current year by regularly consulting the shared audit schedule.
• Cooperate effectively in audit planning: They must actively participate in the development of the annual audit schedule when LVMH Beauty requests their input. This collaboration ensures that the key partners of all Maisons are included in the audit program.
• Record information on audits conducted outside the shared audit schedule: If a Maison decides to conduct a quality audit at a subcontractor outside of the shared audit schedule, it must share the key information of this audit with the other LVMH Beauty Maisons by recording the audit documents on SharePoint

LVMH Beauty -

Subcontracting Quality.

This includes the audit grid, the audit report, and the follow-up on the action plan.

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INTRODUCTION MODULE

3/ PREPARATION BEFORE THE AUDIT

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INTRODUCTION MODULE

Various documents need to be shared and completed prior to a quality audit:

3/ PREPARATION BEFORE THE AUDIT

1. 2. 3.

BDIV-QD-005 - Quality Audit Prework for Lead Maison :

Provide the auditor with a summary of important information regarding the subcontractor;

BDIV-QD-004 - Subcontractor Quality Audit Prework :

This document aims for the collection of essential information about the subcontractor (contacts, internal or external microbiological laboratory, certifications, scope of activities for LVMH Beauty Maisons, etc.) and enables the auditor to compare the information provided by the Lead Maison and the subcontractor to ensure their consistency;

BDIV-QD-006 - Quality Audit Agenda :

Helps to plan the audit

over two days, ensuring that all important points are addressed and that the themes/areas to be observed are optimally distributed according to the organization of the subcontractor's factory.

Remember to share the documents in English or French according to the working language of the subcontractor.

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INTRODUCTION MODULE

3/ PREPARATION BEFORE THE AUDIT

BDIV-QD-005 - Quality Audit Prework for Lead Maison

The document 'Quality Audit Prework for Lead Maison' (BDIV-QD-005) is the first document you need to complete in order to prepare your quality audit. It is important that this document is filled out so that all information is accessible to all other LVMH Beauty Maisons if they wish.

Points of attention in completing the document:

• Subcontractor's contact details: Verify the accuracy of mail addresses and phone numbers of the contacts at the subcontractor.
• Empty fields: Fill in all fields of the document. If not applicable, indicate 'N/A'.
• Header: Clearly indicate the ID and name of the audited company in the header of the document.

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INTRODUCTION MODULE

BDIV-QD-005 - Quality Audit Prework for Lead Maison

3/ PREPARATION BEFORE THE AUDIT

Points of attention in completing the document:

In the section 'Types of products manufactured by the subcontractor', it may be useful to mention key/important products for the Maisons collaborating with the subcontractor to be audited. The risk assessment is not the same for sensitive products (eye products, baby products, etc.) and other products.

If a specific agreement exists between the subcontractor and the Lead Maison regarding certain products, specify it in this section of the document.

In the field related to subcontracted products sold on the Chinese market:

• Check 'No' if no product from the subcontractor, for any LVMH Beauty Maison, is sold in China. In this case, the specific CSAR points of the LVMH Beauty Quality Audit Grid will not be verified.
• Check 'Yes' if at least one product from the subcontractor is sold in China for a LVMH Beauty Maison. The specific CSAR points of the LVMH Beauty Quality Audit Grid must then be audited.

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INTRODUCTION MODULE

3/ PREPARATION BEFORE THE AUDIT

BDIV-QD-004 - Subcontractor Quality Audit Prework

Once the document 'Quality Audit Prework for Lead Maison' (BDIV-QD-005) is completed, you can move on to the next step: send the document 'Subcontractor Quality Audit Prework' (BDIV-QD-004) to the identified contact(s) at the subcontractor. Take advantage of this sending to propose several possible dates to the subcontractor for conducting the quality audit, considering that a factory audit lasts two days. Ensure to include the LVMH Beauty contact in copy of all your email exchanges with the subcontractor. Do not forget to indicate the ID and name of the company to be audited in the header of the document.

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INTRODUCTION MODULE

3/ PREPARATION BEFORE THE AUDIT

BDIV-QD-006 - Quality Audit Agenda

Upon receipt of the preparatory document completed by the subcontractor, you can send them the audit schedule 'Quality Audit Agenda' (BDIV-QD-006).

This document is to be sent to the subcontractor in XLSX format no later than one month before the audit. This agenda also provides a non-exhaustive list of documents that the subcontractor must prepare and present on the day of the audit.

After receiving the subcontractor's feedback on this tentative schedule, adjust it if necessary and send the final version in PDF format to the subcontractor no later than two weeks before the audit.

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INTRODUCTION MODULE

Where can the documents related to a quality audit be found?

The various documents (prework documents, LVMH Beauty Quality Audit Grid, quality audit report) can be found in the LVMH Beauty - Subcontracting Quality SharePoint.

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4/ BEST PRACTICES

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INTRODUCTION MODULE

4/ BEST PRACTICES

A/ AUDITOR'S POSTURE AND TECHNICAL EXPERTISE

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INTRODUCTION MODULE

A/ AUDITOR'S POSTURE AND TECHNICAL EXPERTISE

The auditor must demonstrate good interpersonal skills

As an auditor, you must adopt a professional posture and appropriate behavior throughout the audit.

Attire and interpersonal skills

• Appropriate attire is required for an audit.
• Active listening, courtesy, and thanking the interviewees for their time and collaboration are also essential.

Neutrality and objectivity

During the audit, you must:

• Remain factual: Your findings should be based on observed facts and tangible evidence, avoiding any value judgments.
• Adopt a neutral tone.
• Adapt to your interlocutor: It is important to adjust your positioning and discourse according to the auditee, without being influenced or disturbed by them.

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INTRODUCTION MODULE

A/ AUDITOR'S POSTURE AND TECHNICAL EXPERTISE

The auditor must have strong technical expertise

Rigor and expertise

To successfully conduct your audit, you must:

• Ask the right questions: It is essential to ensure that you obtain complete and accurate information for each control point.
• Master your subject: An in-depth knowledge of regulations, the evaluation framework, industrial processes, and subcontracted products is essential.
• Cross-check information: Systematically cross-referencing information from different sources (documentation, testimonies, observations) ensures the reliability of findings.
• Collect evidence: As an auditor, you will be required to collect evidence to support your observations and ratings, such as document details (references, versions), equipment identifiers, and the names of the interviewees.

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INTRODUCTION MODULE

The auditor must have strong technical expertise

Example :

REQUIREMENT LVMH n°9 : Pest control : measures are taken to prevent the entry of pests

Do you have measures in place to prevent pests from entering your factory?

We have a contract with an external company for pest control, which visits the site every two months.

The auditor cross-checks the information provided by the subcontractor with:

The auditor observes in the premises the presence and condition of traps for flying and crawling insects.

In room, the auditor proceeds to verify the documentation related to pest control.

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INTRODUCTION MODULE

The auditor must have strong technical expertise

Example :

REQUIREMENT LVMH n°8 : Pest control : measures are taken to prevent the entry of pests

During his visit to the warehouse, the auditor notes the reference of a crawling insect trap (device X). He observes the general condition of the traps.

The company intervenes every two months to inspect and empty them.

What is the frequency of equipment inspections?

The auditor observes in the premises the presence and condition of traps for flying and crawling insects.

How did you develop the maintenance program for the devices?

Could you present the contract you have with the external company for pest control?

The auditor notes the references/versions of the documents presented by the subcontractor as evidence.

In room, the auditor proceeds to verify the documentation related to pest control.

Could you present the records related to the insect readings in the devices?

(contract with an external company, maintenance program for the devices, records, action plan in case of deviations)

It is indicated that for device X in the warehouse that we observed previously, a high number of crawling insects was recorded on the date xx/xx, exceeding the limit given in your risk analysis. Have you implemented an action plan?

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INTRODUCTION MODULE

4/ BEST PRACTICES

B/ CONDUCTION OF AN AUDIT

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INTRODUCTION MODULE

Conducting a quality audit at a subcontractor's facility

B/ CONDUCTION OF AN AUDIT

The quality audit begins with an essential presentation to establish a clear framework and mutual understanding of the audit objectives.

1. Presentation of the LVMH Group: Use the document "Présentation LVMH Beauty" available on the

2. Framework of the audit: Clearly remind the framework and objectives of the quality audit, as well as the methodology that will be employed. 3. Presentation of the subcontractor: Invite the subcontractor to briefly introduce themselves in turn (note, if the subcontractor deploys a 30-minute commercial presentation, this is out of context). Take this opportunity to validate the list of LVMH Beauty Maisons with which they collaborate and the nature of their activities. This introduction will help lay the foundation for a constructive dialogue and ensure a common understanding of the audit's stakes.

SharePoint LVMH Beauty - Subcontracting Quality

to present

the group, its values, and its quality requirements.

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INTRODUCTION MODULE

B/ CONDUCTION OF AN AUDIT

Concluding a quality audit at a subcontractor's facility

The audit concludes with a comprehensive debriefing with the subcontractor. This moment aims to:

• Propose improvement opportunities: Start by addressing the improvement opportunities that were identified throughout your audit.
• Highlight strengths: Then address the positive aspects observed, thereby valuing the subcontractor's good practices.

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INTRODUCTION MODULE

Recording of documents on the SharePoint LVMH Beauty Subcontracting Quality

Once the quality audit is completed, the archiving of associated documents is essential. Centralize all important documents on the SharePoint LVMH Beauty - Subcontracting Quality:

• Preparatory documents: "Quality Audit Prework for Lead Maison" (BDIV-QD-005) and "Subcontractor Quality Audit Prework" (BDIV-QD-004), Final Quality Audit Agenda;

• Audit grid: Version completed during the audit;
• Audit report;
• Action plan (CAPA): Corrective action plan defined by the subcontractor.

This centralized and organized storage ensures easy access to audit information for all stakeholders and facilitates the follow-up of corrective actions.

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INTRODUCTION MODULE

Recording of documents on the SharePoint LVMH Beauty Subcontracting Quality

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5/ AFTER THE AUDIT

A/ Audit Grid and Report

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INTRODUCTION MODULE

A/ Audit Grid and Report

LVMH Beauty Quality Audit Grid

When auditing a LVMH Beauty subcontractor, you will need to use the LVMH Beauty Quality Audit Grid BDIV-QD-002. This grid covers all production activities and allows for the evaluation of the subcontractor's compliance with LVMH Beauty quality standards.The quality standards to which the subcontractor must comply are:

• Regulation (EC) No 1223/2009 of the European Parliament and of the Council of 30 November 2009 on cosmetic products,
• ISO 22716:2007 standard concerning Good Manufacturing Practices (GMP) for cosmetic products,
• LVMH Beauty Microbiological Directive - "ENR 0682A LVMH Perfumes & Cosmetics Microbiological requirements",
• Subcontractor Quality Agreement LVMH (BDIV-QD-011),
• CSAR (Cosmetic Supervision and Administration Regulation).

You must send the completed audit grid to the Lead Maison within 30 working days after the audit for review and comments.

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INTRODUCTION MODULE

LVMH Beauty Quality Audit Grid

A/ Audit Grid and Report

For each item in the grid, you will need to note your observations and assign an evaluation based on the discrepancies found:

• Conform : The inspected item meets expectations and/or improvements are possible, but they do not constitute a discrepancy with regulatory requirements or LVMH requirements.
• Minor : Non-conformity that may pose a moderate risk of impacting the quality of the bulk or finished product and/or non-conformity with a general article of the CSAR (Cosmetic Supervision and Administration Regulation).
• Major : Non-conformity that may pose a major risk of impacting the quality of the bulk or finished product and/or non-conformity with a key element of the CSAR and/or a combination of several minor non-conformities.
• Critical : Non-conformity that, regardless of the level of risk, leads to confirmed failure (batch recall, out of microbiological specifications, etc.) and/or non-conformity with a critical element of the CSAR and/or a combination of several major non-conformities.

You can find the LVMH Beauty Quality Audit Grid (BDIV-QD-002) on the:

SharePoint LVMH Beauty - Subcontracting Quality

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INTRODUCTION MODULE

A/ Audit Grid and Report

Quality Audit Report

Once the LVMH Beauty Quality Audit Grid has been reviewed and approved by the Lead Maison, you can complete the quality audit report (BDIV-QD-003). You will then communicate this report, including the score obtained by the subcontractor, to LVMH Beauty. This report in PDF format will then be shared with the subcontractor by LVMH Beauty.

You can find the Quality Audit Report (BDIV-QD-003) on the:

SharePoint LVMH Beauty - Subcontracting Quality

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INTRODUCTION MODULE

A/ Audit Grid and Report

Audit Score and Alert Process

The subcontractor is considered compliant with the required quality level for the activities entrusted by LVMH Beauty, and the audit is acceptable.

You can find the document BDIV-QA-001 - Audit Policy in the :

SharePoint LVMH Beauty - Subcontracting Quality

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INTRODUCTION MODULE

A/ Audit Grid and Report

Audit Score and Alert Process

The subcontractor is considered compliant under conditions with the required quality level for the activities entrusted by LVMH Beauty, and the audit is acceptable under conditions.

You can find the document BDIV-QA-001 - Audit Policy on the:

SharePoint LVMH Beauty - Subcontracting Quality

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INTRODUCTION MODULE

A/ Audit Grid and Report

Audit Score and Alert Process

The subcontractor is considered non-compliant with the required quality level for the activities entrusted by LVMH Beauty, and the audit is not acceptable: The subcontractor is listed in the LVMH Beauty Quality Blacklist:

• It is a NO GO for any new collaboration;
• If it is an active subcontractor, immediate risk control actions must be implemented, and the action plan must be followed very rigorously by the Lead House, on behalf of all LVMH Beauty Maisons.

You can find the LVMH Beauty Quality Blacklist on the:

SharePoint LVMH Beauty - Subcontracting Quality

You can find the document BDIV-QA-001 - Audit Policy on the:

SharePoint LVMH Beauty - Subcontracting Quality

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5/ AFTER THE AUDIT

B/ Follow-up of the Action Plan (CAPA)

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B/ Follow-up of the Action Plan (CAPA)

Follow-up of the Action Plan (CAPA)

Regardless of the score obtained during the audit, defining a corrective action plan in response to the discrepancies observed during the audit is mandatory. Development and follow-up of the action plan:

• Responsibility of the subcontractor: The subcontractor is responsible for proposing a concrete and detailed action plan to correct the discrepancies identified during the audit.
• Role of the Lead Maison: The Lead Maison plays a crucial role in monitoring the implementation of this action plan throughout the year following the audit.

Importance of the action plan for future audits: The action plan, and especially its proper execution, is a determining factor for planning future audits at the subcontractor. Indeed, a new audit can only be considered after the effective implementation of the corrective actions identified in the action plan.

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