The aim of the audit is to identify weak points of the company’s operations and discover unexploited development potential. The question is whether the frequency of such supplier audits in Poland is sufficient and what is buyers’ real attitude towards it. To verify if suppliers actually comply with the code of conduct is as important as the fact of having the code in place. Regular assessment and audits illustrate the progress and changes in the company’s cooperation with the supplier, and the implementation of the strategy for a given range of a product category.
Supplier audits may be conducted by the company or by an external contractor. The aim is clear however – to verify all or selected areas of supplier’s operations in order to indentify risks and, ultimately, to find solutions that ensure more secure and effective cooperation.
Control or partnership in supplier relations?
An audit is an element of supplier quality assurance. The benefits are in the interest of the buyer, but also of the audited organisation as the audit provides findings that can be used to increase competitive advantage. Therefore, if the audit has been conducted properly, it becomes a tool for promoting partner-like relations with suppliers and creating added value for both parties to the transaction.
An audit is often conducted prior to starting cooperation with a strategic supplier. However, the audit frequency depends on the needs and requirement of the company. Naturally, a controversial issue is when and whether to use unannounced or announced audits. It depends mainly on the level of supplier-buyer relation and the mutually agreed code of conduct. Another sensitive issue is the selection of people with whom the company decides to hold auditing discussions. Whether you should talk to the management or the regular employees? There is no single answer, but the most popular model would be to first talk to the management to determine their expectations related to the audit (if it is the ordering party) and obtain all documents and information required to know the initial situation of the company. Next, the company should talk to regular employees to gain additional information and any missing data needed for the report.
From preventive to remedial attitude
An audit may cover all aspects or be focused on a certain element of operations e.g. compliance with environment protection rules. The scope of the audit depends on its purpose. It may be preventive, and in such a case the intent is to assess actual possibilities and prospects of cooperation with the supplier. Another option is a project-based audit used when an organisation has got specific needs related to the nature of activities it carries out at a given time. An audit may also be a form of a response to an issue that occurred during cooperation with the supplier. In such a case, the aim is to identify the problem and find a solution, and sometimes to develop a remedial action plan. The plan sets out tasks to be carried out by the supplier to reclaim the qualified supplier status. As a result, depending on the results of the programme report, cooperation may be continued or terminated.
Aspects subject to assessment
The aspects subject to an audit include the supply chain parameters, e.g. delivery time and quality of services. Other important elements are: the delivery’s compliance with the contract and client satisfaction, as well as e.g. the number of procedural errors, quality of documents and overall quality of cooperation.
What are the post-auditing activities?
First of all, the audit results should be gathered to form one picture that will clearly present weaknesses, risk points, and areas of supplier potential. Preparation of such a report requires a comprehensive approach to the company’s functioning and experience in supplier assessment. The outcomes of the report should be presented in different ways depending on the receivers. A message sent within the company will differ from the one addressed to an external supplier. The audit results should be presented and accompanied by explanations and relevant comments. Only then, an audit may actually be instructive. Any subsequent activities depend on the supplier who, at its own discretion, takes actions to introduce suggested changes and engage relevant management units of the company.