Supply chain focus: top ten ethical trade audit headaches
Auditing your suppliers and associated factories in your supply chain, and tracking those audits, can be a time-consuming and complex task, but it’s a crucial one; we’ve seen what happens to organisations whose auditing processes fall short of the necessary standards, with the Rana Plaza disaster and the horsemeat scandal still looming in the media long after the events took place. The spotlight is therefore on the need to plan and execute consistent, streamlined factory audits that will help retailers to manage their supply chain and meet their corporate social responsibility targets.
Rigorous hands-on factory and supplier auditing is essential to ensure supplier compliance, and yet auditing remains a time-consuming and resource-intensive task. We’ve identified our clients’ worst auditing headaches, and how supply chain management software like ediTRACK’s Lighthouse ‘Ethical Trade’ module can help to alleviate them.
1. Using inconsistent methodologies
With supply chain networks consisting of multi-tier suppliers across the world, it’s not surprising that auditing suppliers and factories can require very different and localised ways of working. With supply chain management software all parties can easily access an online system and process, making it easier to implement one way of working as all parties manage the audits through the system in the form of checklists and evaluation forms, which can prevent the duplication of work and audit fatigue.
2. Managing audit profiles
Monitoring risk and managing audit profiles on an on-going basis is time-consuming even for a single supplier as they can still have several associated factories, and many retailers have hundreds if not thousands of multi-tier suppliers to monitor. Unless you have set guidelines with which to classify and select audit processes, audit selection and tracking may have to be painstakingly researched and engineered for each supplier and their associated factories. Good supply chain management software stores audit profiles and tracks updates in real-time, making it easy to keep multiple audit profiles updated, to allocate the appropriate audits, and to access data quickly.
3. Having visibility of all suppliers, factories and their relationships
In order for retailers to effectively audit and monitor supplier risk, they need visibility of their end-to-end network of fluctuating hierarchies and relationships between factories and suppliers. Web-based software can provide access for retailers and their suppliers to be able to easily set up and share all required supplier information and present that data in a user friendly way, making it easier to monitor and update on an ongoing basis.
4. Choosing the right audit process.
You’ll have multiple audit processes to choose from, and you need to select the right process depending on the maturity/relevance of the supplier or factory in question. When you have to do this for hundreds of suppliers it becomes a time-consuming task. ediTRACK’s ethical trade module stores details of audit processes available along with guidance so that it’s more efficient, and you can still be confident that the most appropriate audit is selected for any particular supplier and carried out.
5. Creating ethical practice guidelines for factories and suppliers
Factories and suppliers may or may not have their own ethical code in place, but either way you must make sure they meet the ethical standards of your particular organisation and industry, and that they are the correct guidelines to be measuring against. This activity is made easier by installing software that stores codes of practice such as the ETI base code policy, and enables you to add to them or customise versions of it so that it is completely in line with your company’s own policies.
6. Setting up and managing improvement programmes
When factories and suppliers don’t come up to the required standards, you’ll need to implement improvement programmes quickly and monitor accordingly – which can be a gruelling task to manage, especially for multiple suppliers. Ethical Trading software is designed to guide you through the process and will track the progress and results of multiple improvement programmes. Systems can automatically create alerts against certain milestones and flag up issues and notify users of the next steps in the process.
7. Keeping track of when audits are due and keeping them up to date
Actively testing for electrical and building safety is crucial and having a hands-on approach to auditing is the best way, but actively testing and inspecting factories is time-consuming and resource-intensive. Use software that generates reminders for when certain audits or testing is due, to ensure this is carried out on time.
8. Creating reports and recognising trends/areas for improvement
Preparing Work In Progress (WIP) reports can often be an arduous and time-consuming task, especially when you have to draw on data in different formats from multiple platforms. Multiple data formats also make it difficult to spot potential issues. Where possible, it’s best to store all data centrally on a web-hosted system where it’s accessible by all approved people in your supply chain. With Lighthouse Ethical Trade you also have access to real-time data through automatically generated graphs and reports via an easy to use dashboard. Lighthouse also enables you to create your own reports that run at the click of a mouse.
9. Administrative errors through sending countless phone calls, spreadsheets & emails
It involves huge amounts of administrative resource to maintain databases of audit information, especially if you’re reliant on paper processes and spreadsheets. ediTRACK’s software is cloud-based, which enables everyone to access data in real-time, saves time and money, and reduces the chance of error.
10. Sharing audit information with purchasing departments
During the sourcing and product development process for any company it helps to integrate the ethical trade process and share the data stored into the product development stages in your business process, so that anyone with purchasing power has instant visibility of a supplier’s ethical credentials before placing any orders. By having a more integrated set of business tools organisations can make more informed decisions on whom they choose to work with right at the start of a product development process in order to minimise risk.