Supply Chain Imperative, The: How to Ensure Ethical Behavior in Your Global Suppliers

As with most other inspections ”OSHA, health and safety, EOE ” the audit process almost always begins with a preaudit visit where any major problem areas are identified and recommendations for action are given, followed after a period of time by the official audit visit, where the facility is formally audited for compliance. Third-party audit teams usually document their findings to both the hiring company and to the supplier s management team, providing them with the written results marked against the required codes and scores. Good audit firms also go further, providing recommendations for action that can help a supplier make important improvements.

As we have seen, the two processes ” monitoring and auditing ” are not the same, and should be dealt with in separate, differently constructed programs. Supporters of an independent audit contend that just as no company would expect to have its financial statements unchallenged, a company s social and environmental performance also merits some level of verification. And also just like financial audits , a strong verification program can not only identify areas for improvement, but can also provide independent and certified evidence of accomplishments.

Auditing Tools and Techniques

Whether a company chooses to use its own auditor or bring in a third party, there are still a number of items that the audit team will need before the official audit process begins.

• The results of all the surveys and questionnaires that have been sent to the supplier. Although in many cases the information will need to be verified by the audit team, the supplier s response to a questionnaire can go a long way toward speeding up the process, and will often provide valuable information on areas of potential concern. As suppliers become more familiar with the audit process, and the results of audits and survey responses can be compared, repeat audits often can be prioritized and customized, allowing the company to focus on highpriority or suspect suppliers, while reducing the frequency of audits to occasional spot-checks on suppliers that have proven their adherence to standards in the past.

• A detailed supplier description that provides the audit team with all relevant information on the supplier: products manufactured, volume of purchases, number of employees , previous violations, etc. (see Appendix B).

• All required standards and performance indicators that apply to the supplier.

• An audit checklist that provides the audit team with a structured, step-by-step guide through the entire interview and inspection process. These checklists need to be comprehensive enough to guide the team quickly from issue to issue, and should include all areas to be addressed, including relevant performance indicators, a grid for indicating compliance/ noncompliance , and space for comments ” all in a compact and easily followed format (see Appendix C).

• A violation guideline, detailing specific procedural guidelines for supplier management when the audit reveals violations, so that the issues can be addressed immediately and constructively as part of the audit itself.

Providing the supplier s management with a leave behind guideline can help them make improvements quickly and effectively.