The 4 secrets of successful supply chain audits

6 min read
Leighton Burley

In the past, when businesses were audited, there was often a heavy focus on the financial side of the company. This trend is changing, and now auditors take a more comprehensive look at a company’s operations. The supply chain is becoming a keen point of interest for retail, manufacturing and goods-based businesses.

A supply chain is the network between your company and the vendors who produce and distribute the products you sell.

This network is comprised of many people, different companies and various entities and resources.

The supply chain is a representation of the many steps that your business takes to create a product and then distribute it to the final buyer. By reviewing and refining its supply chain, even small business can reduce the costs of production. As a result, they can offer their products or services at lower, more competitive rates.

4 ways to make your supply chain audit a success

In this article, we will be taking a look at key best practices for auditing your suppliers successfully.

  1. Set good auditors in place.
  2. Make sure to record everything.
  3. Build healthy relationships with your suppliers.
  4. Review the chain regularly to reduce risks.

Then keep reading for a list of ways your business can benefit from a supply chain strategy.

Best practices for supply chain audits

The point of auditing your supply chain is to review the information you’ve gained and make adjustments to your production and delivery streams. These could be anything from renegotiating contracts to upgrading communications and tracking software. The end goals will be to:

  • Improve efficiency
  • Reduce the costs of production
  • Minimize the chances that there will be a disruption in your supply chain

To successfully audit your supply chain, use these best practices.

1. Set good auditors in place

Supply Chain Sample Diagram

Every business needs capable leaders, and your auditing is no different. If you're going to audit your supply chain properly, then you'll want to put a small team of competent reviewers in place to make sure that the job gets done correctly.

By identifying expert leaders from within your own business, you'll be able to create two-way communication and accountability.

Keep in mind that the audits will only be as good as the auditors, so make sure that your auditing team is comprised of qualified individuals. You may want to include personnel from different departments to ensure that you get a variety of

2. Make sure to record everything

Your auditing team will be looking for ways to eliminate any inefficiencies that your suppliers may be encountering. One of the best ways to identify inefficiency or waste is by recording as much information as possible about the production and delivery processes.

Ask auditors to create a map of the entire process, from start to finish.

The more details they're able to document, the easier it will be for your auditors to determine which steps can be sped up or eliminated altogether.

Once they have a detailed diagram in front of them, your team can work on creative ways to remove any of the intermediate steps that aren't essential to producing or delivering quality products.

3. Build healthy relationships with your suppliers

If you want your business to be around for the long run, then you'll want to make sure you have a healthy relationship with your suppliers. Because without your suppliers, there won't be any products for you to sell.

Supply Chain Boxes on Conveyor

Your suppliers are your most important alliance, and you should treat them accordingly.

Instead of telling them how you want them to operate, try to listen to what they have to say. The goal is a partnership that achieves shared objectives.

Look at supply chain audits as another opportunity for you to start a two-way dialog that improves performance, increases efficiency, and provides useful feedback about why an idea may or may not work.

4. Review the chain regularly to reduce risks

Your business should be meeting with your suppliers regularly to review the process of manufacturing and ensure that all suppliers are efficient, current and compliant with company standards.

This will not only help avoid production disruptions, but also minimise fraud and theft.

You'll want to make a few unscheduled visits so that you can get a picture of what goes on when your business reps aren't in the building. If any suspicious activities are happening, it's unlikely you'll find it during a scheduled audit.

By performing these regular reviews, you'll be able to identify any potential risks and take steps to remedy them before they cause your company any problems.

Why audit your supply chain?

When your suppliers fail you or your chain breaks down, you're not just losing money. Your company’s reputation can take a hit if the products that you're producing aren't checked for quality or delivered on time.

Here are a few reasons why your business will benefit from regular supply chain audits.

They save you money

Supply Chain Food Processing Equipment

One of the most apparent benefits that come from regular audits of your suppliers is the fact that it can help to reduce risks. You can use audits to:

  • Track your supplier's performance against service agreements
  • Find and resolve any repeat mistakes
  • Head off potential risks before they create problems

This can help prevent any failures on the part of your supplier and save your business money as a result.

Suppliers stay up to date

If you are not auditing your supply chain regularly, then there's no way of knowing if your suppliers are complying with the standards that your company has set in place for operations.

Over the years, the regulations that your business must comply with will change.

Regular supply chain audits will help ensure that suppliers know what’s expected of them.

With an active supply chain strategy in place, you can also make sure that your suppliers are treating their employees ethically and that their workspaces are safe and compliant.

You can improve the quality of production

Unless your business has periodic reviews, you'll find it difficult to know whether your business is receiving supplies that:

  • Are on time
  • Meet your quality standards
  • Are without any defects

When you regularly audit your suppliers, you'll be strengthening your relationship with them. If you let your suppliers create or deliver products without carefully monitoring their processes, you miss out on the opportunity to share learnings, increase efficiency and lower prices.

A supply chain strategy can give your business an edge

Whether your business is just establishing a supply chain, or you're looking to improve an existing supply chain, these best practices can be applied.

An effective auditing system can help save your business money, increase efficiency, and improve the quality of your production. It can also act as a safeguard to help ensure that your manufacturing operations are conducted in a safe, ethical manner that meets all of your standards.

Remember that a supply chain audit isn't about catching suppliers who aren’t complying with your standards. Instead, it should be focused on creating a partnership with your suppliers and working with them to achieve the same goals.