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January 4, 2023

A brief introduction to Supply Chain Audits

January 4, 2023

A brief introduction to Supply Chain Audits

Bala Panneerselvam
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We spoke about what an audit is before and in detail on Inventory audits in a warehouse. But inventory audit is not the only type of audit that’s involved in a supply chain process. Every part of the supply chain needs to be periodically checked for quality and safety parameters to ensure reliable service to end customers. 

Why is Supply Chain Audit important?

Supply chain audits are an important tool for companies to ensure that their supply chain is efficient, ethical, and compliant. These audits can help identify areas for improvement and reduce the risk of supply chain disruptions, which can have serious consequences for a business. A general periodic audit also improves the customer experience and satisfaction while keeping the costs low.

Types of Supply Chain Audits

There’s no single audit item called Supply Chain Audit. This is a comprehensive term that includes multiple types of audits that are involved in the supply chain process. We’ll see several types of supply chain audits here, including social compliance audits, quality system audits, and environmental audits. 

Social Compliance Audits

Social compliance audits assess a company's compliance with labor and human rights standards. This can include the safety related audits that need to be performed in any given workspace to ensure workers have a healthy and safe working environment. A large part of this audit is driven by labor and human rights requirements. But it is not uncommon for companies to add more parameters to ensure safety of their employees.

Quality System Audits

Quality system audits evaluate the effectiveness of a company's quality management systems. This is closely associated with the actual product or service the company produces. This ensures the right quality parameters are met in the product produced, necessary checks are done in the process being followed by the people working. 

Environmental Audits

Environmental audits assess a company's impact on the environment and its compliance with environmental regulations. These audits can be related to the carbon emission parameters, disposal of waste in an environmentally friendly manner, regulation of noise and other similar parameters in the workspace. A large part of this audit is also dictated by the environmental regulations.

How to conduct the Supply Chain Audit?

Supply chain audits are non-negotiable for the most part. Yes, most of these are regulatory requirements but it also is essential to run your supply chain process in the most optimal way. Imagine if Ikea doesn’t run a proper supply chain audit. This could lead to some items missing screws or delivery getting delayed for some orders or even taking orders for items that are not there in the warehouse. 

These kinds of issues have significant impact over the customer experience and in turn to the top line of the business. 

Conducting supply chain audits can be a complex and time-consuming process, but the benefits are well worth it. By identifying problems and implementing corrective actions, companies can improve the efficiency of their supply chain, reduce costs, and enhance their reputation.

Steps in conducting an audit

There are several best practices that companies can follow to ensure that their supply chain audits are effective. First and foremost, it is important to establish clear objectives for the audit and to determine what specific areas of the supply chain need to be assessed. Companies should also consider hiring a reputable third-party auditor to conduct the audit, as this can add credibility to the process. This is highly recommended for almost all companies. If you can’t hire a 3rd party to do the audit, you can use someone who does not report into the supply chain team. This will ensure that the audit is unbiased.

It is also important for companies to communicate with their suppliers about the audit and to provide them with the necessary resources and support to ensure that the audit is successful. This can include training on how to prepare for the audit and information on what will be assessed.

How technology can support your audit process

You have several technology tools that can make your audit process very easy to perform. A good technology audit platform should provide you with the following capabilities.

Ability to schedule audits

The platform should allow you to schedule audits for a specific period like days, weeks, months etc and automatically create the audit tasks and assign them to people at that time. 

Customize the audit forms extensively

Audit forms tend to be very different from company to company and use case to use case. Also, they tend to change a lot over time. It is important for the platform to give the ability to customize the forms extensively. 

Access Reports in real time

The central team should have access to the audit reports in real time untampered. The reports also need to be customized according to the needs. 

Building your audit platform using Zorp

Zorp is an operations platform that helps businesses to build applications to run their business effectively. Zorp is a very powerful platform to build the tools you need to run your audits. It supports all the features that are described above. You can check it out here.

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