3 Ways Supplier Audit Can Help You Mitigate Supply Chain Risks

by Procurement Freelancers Team

The quality of suppliers is crucial to any business. There are no two ways about this. Either you have reliable, reputable suppliers who help you to deliver quality goods or services to your customers, or you are compromising with quality, risking the reputation to go down the drain at any given moment. Consequently, your monetary interests are also in line if this is the case. In other words, if your supply chain is disrupted or is not delivering up to the mark, it could translate into a huge loss of profits. This is where supplier auditors come into the picture. They help you prevent various supply chain risks and ensure your profit margins.

In recent times, many brands are turning to supplier audit services to make sure that their suppliers are performing up to the market standards. Regardless of the size and nature of the organization, businesses can benefit a great deal from supplier audits if carried out properly. But the area it helps the most is mitigating supply chain risks. Read on to know more about supplier audit and how it can help your business to grow.

The Role of Supplier Audit in Your Supply Chain Risk Mitigation

Before we delve into the advantages of supplier audit, let us first clarify the idea. Essentially, supplier audit is how organizations determine that their suppliers meet the expectations, usually of the quality of the goods and/or services they offer. It is a tailor-made assessment program that inspects the quality of products/services, compliance with regulations, workplace environment, and the ability to deliver on time of your supplier. At the same time, a supplier auditor ensures that your suppliers can effectively undertake as well as act upon the specific requirements and conditions set by your organization.

Various Kinds of Supplier Audit to Help Prevent Supply Chain Risks

Supplier Qualification Audit

This is the basic objective of supplier audit. It inspects the quality and ability of the supplier based on your requirements and conditions. But at the same time, it also helps you to determine the legitimacy of the supplier. Whether it is a fraud, whether they are the real manufacturers, whether they comply with the government regulations—you can expect all these answers from your supplier auditor.

Extensive Factory Audit

Rather than focusing on one supplier, your organization could thrive if you keep looking for new opportunities. This is exactly what supplier audits can get you. The process makes it easier to evaluate potential suppliers and sort them to give you a better deal. Furthermore, with extensive factory audits, it also monitors the management systems of the existing suppliers to keep the supply chain moving.

Environmental Audit

In the last couple of decades, sustainability has become a major concern for any organization. Along with maintaining financial profit, it is now imperative for businesses to comply with environmentally responsible practices. The audit can also reveal whether your suppliers are following the same and help you demonstrate your environmental commitments to your consumers.

Social Audit

Besides environmental concerns, social responsibility is also a crucial aspect of your sustainability goals. With a social audit, you can measure your suppliers’ performance in this regard and subsequently, team up with the right fit.

Supplier Audit and Supply Chain Risk Mitigation: How It Works

Considering The Types Of Supplier Audits, The Process Can Help You Prevent Supply Chain Risks In The Following Ways:
Measuring Quality Control

Audits that extend beyond your facility, both upstream and downstream, can ensure flawless quality control measures. With this, you can be sure that the entire supply chain is functioning properly. The process also allows you to anticipate weaknesses or breakdowns before they take place, thus dissipating the impact of the potential risks. It is also a useful tool to device contingency plans or strategies.

Identifying Unethical or Hazardous Sourcing

The current market trend is to drive your supply chain towards net-positive or net-neutral impacts on the environment. Supplier audits can efficiently point out where more effort is needed to undertake sustainable initiatives. The same applies to your suppliers’ social responsibilities as well.

Identifying Geopolitical or Natural Risks

On the surface, natural calamities and trade wars have nothing in common. However, both could have the same impact on your supply chain. Therefore, auditing the supply chain regularly and properly will provide a degree of certainty and clarity in anticipating such unpredictable events, resulting in having enough time and resources to device a backup system.

To sum up, supplier audit is the process of measuring your supplier’s performance. It is crucial to maintain your product quality as well as handle the safety issues that might arise eventually. As such, a supplier auditor serves as the alarm system of your supply chain. This is where you will receive the first red flag if anything goes sideways. So, reach out to one and allow your business to become more resilient and sustainable.

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