Companies that are heavily invested in sourcing should do their utmost to keep their logistics chain robust. One established way to ensure that the product you are sourcing is of standard quality is to hire the services of supplier auditors.
Supplier auditing is evolving rapidly, and auditors must keep up with new trends to ensure quality and compliance.
Let’s explore six emerging trends shaping the future of supplier auditing:
- Enhanced technology for supplier auditors.
- Increased focus on sustainability.
- Enhanced supplier collaboration.
- Data-driven decisions.
- Remote auditing capabilities.
- Focus on supplier diversity.
Enhanced Technology for Supplier Auditors
Thanks to automation processes, supplier auditing has evolved. Machines can now do what used to take a long time in just a few minutes. They help boost productivity and minimise the chances of making a mistake.
For instance, Deloitte reported that 53 percent of companies have implemented automation in audits. These tools process data, create reports, and flag issues. This frees auditors to focus on crucial tasks.
Audits become more accurate as they interact with artificial intelligence (AI) and machine learning (ML). They entail examining data patterns, identifying potential problems, and keeping auditors alert to areas that may require more attention.
According to a McKinsey report, AI can cut auditing costs by as much as 20%. AI and ML can sort through large volumes of data to identify anomalies, patterns, or risks that a human auditor cannot detect.
Increased Focus on Sustainability
Sustainability is one of the buzzwords in today’s world. There is a new trend where firms only deal with suppliers who adhere to environmental conservation. Supplier auditors ask about sustainability. They ask about it in material and product procurement, waste disposal, and energy conservation.
The Global Sustainability Study also found that 85 percent of consumers now buy sustainable products and services. This underscores the importance of green activities.
Enhanced Supplier Collaboration
Modern communication tools speed up audits by enabling instant interactions with suppliers. A BCG survey found that 72 percent of suppliers reported that they value more when they help solve problems. This improves solutions and supplier relationships within the supply chain.
Other technologies, like video conferencing and instant messaging, make it easy for auditors to talk with suppliers. They can talk in real-time. The suppliers may be in different parts of the world. This aspect ensures trust between the organizations.
It makes it easy to deal with problems and boosts the suppliers’ performance. As a result, involving suppliers in audits is a proactive way for firms to find better solutions. It also helps them improve their supply chain’s resilience.
Data-Driven Decisions
According to the study’s findings, supplier auditors use big data. Big data analysis is useful in understanding patterns, threats, and possibilities of an event. As a result, decision-making improves significantly. According to IBM, organisations adopting big data analytics have 15% higher audit accuracy.
Extensive data analysis helps supplier auditors better understand the vendor’s supply chain. When auditors analyse data from different areas, they can discover risky trends or opportunities. It also provides auditors with more information, so they can focus on specific areas that require attention.
Diagnostic analysis identified problems that had occurred in the past, while predictive analytics identified future problems. This makes it possible for auditors to look for and solve such issues before they become significant. Using historical data and machine learning algorithms, auditors can identify suppliers at risk and take early action to prevent them.
Remote Auditing Capabilities
In today’s world, remote auditing is becoming increasingly popular. Video conferences and other technological instruments perform remote audits. This method saves time and eliminates the cost of frequent audits.
Pricewaterhouse Coopers conducted another survey and found that 45% of the firms have adopted remote auditing. Virtual audits have several advantages over conventional ones, other than financial ones. They enable auditors to conduct audits more frequently, thus enhancing frequent monitoring of the suppliers’ performance.
Virtual audits also ease the extension of auditors’ reach to suppliers’ sites, ensuring that all suppliers are on a par with each other.
Focus on Supplier Diversity
It is becoming increasingly critical to have supplier diversity. Organisations are now looking for diversity to encourage suppliers from diverse backgrounds. Supplier auditors scrutinize the organisation’s diversity practices and policies.
According to Hackett Group research, firms with supplier diversity programmes benefit from increased procurement savings of between 10% and 15%.
Diversity considerations are beneficial to innovation and reflect a customer base’s ethos. So, supplier diversity is important for organizations. It broadens the pool of ideas. This improves the chances of finding new and efficient solutions to problems.
Conclusion
Supplier auditing is dynamic in nature. To be effective, vendor auditors must be knowledgeable about these emerging trends. We see the acceptance of new technology and a focus on sustainability as key. Also, important are cooperation, data analysis, remote auditing, and support of diversity. As a result, supplier auditors can understand the trends above. They can help companies meet and exceed expectations and build stronger supply chains.
