Post audit: The auditing evaluation (monitoring and improvement) (9/9)

After completion of the audit, evaluations are essential to detect potential for improvements. In addition to the auditing evaluation, in which the auditing program is checked for its effectiveness, a performance evaluation of individual auditors and the auditing team should be carried out in order to identify potential areas of optimization in the auditing process.

As such, the requisite questions post completion of the SCRM audit are:

Monitoring and Controls:

Documentation Have all documents required by the auditor been prepared or made available?
  Are the audited documents/evidence available in sufficient quantity?
  Has a comprehensive SCRM audit report, including improvement recommendations as well as a description of the current state, been prepared?

Filing

Were all important results of the SCRM audit secured in writing?
  Were all important results of the SCRM audit secured electronically?
Evaluation of the SCRM audit program
Was the number of sites to be audited appropriate?
  Was the selection of staff for the face-to-face interviews appropriate?
  Was the number of interviews conducted adequate?
  Were the appropriate SCRM auditing methods selected?
  Were the performances of the auditor and SCRM audit teams evaluated?

Improvements:

Improvement Measures Does the final audit report contain a satisfactory number of quality suggestions for SCRM improvements?
  Have milestones for concrete SCRM improvement measures been set?
  Have the key implementation responsibilities of these concrete improvement measures been defined and assigned?
  Have the key responsibilities for the monitoring and maintenance of these implemented improvements been defined?

Extract from Schröder, M. (2019): Structured improvement of supply chain risk management. In: Supply Chain Management – Contributions to Procurement and Logistics, Series-Editor: Essig, M.; Stölzle, W., Kersten, W., Springer Gabler: Wiesbaden

How to audit SCRM? Conducting the Audit (8/9): List of questions (part c)

Below is a list of questions that can be used to audit the SCRM, concerning the topics Monitoring and Inspections and Communication and Reporting.

Monitoring and Inspections Are important SCRM documents stored in a central database?
  Are important SCRM documents stored in a central database?
  Is there a control process for operational supply chain risks?
  Is there a control process for strategic supply chain risks?
  Are important documents signed by the responsible persons (e.g. department heads) in order to increase commitment?
  How many and which metrics have been implemented to manage the supply chain?
  Are the supply chain management metrics considered in an SCRM context?
  What additional metrics have been introduced for SCRM?
  Is there an up-to-date historical log of key metrics?
  Is feedback from SCRM-related supply chain partners systematically handled and followed up on?

Communication and Reporting

Does a cross-departmental SCRM team meet at regular intervals?
  Is top management regularly informed about supply chain risks?
  Does supply chain risk documentation comply with external requirements?
  Have all of the applied measures been documented in compliance with external requirements?
  Are all affected employees aware of the internal communication channels in the event of an accident?
  Are all potentially affected employees aware of the available external communication channels in the event of an accident?
  Is there adequate access to information to support the identification and assessment of supply chain risks?
  Is a software-based solution available that allows relevant SCRM data to be entered?

Extract from Schröder, M. (2019): Structured improvement of supply chain risk management. In: Supply Chain Management – Contributions to Procurement and Logistics, Series-Editor: Essig, M.; Stölzle, W., Kersten, W., Springer Gabler: Wiesbaden

How to audit SCRM? Conducting the Audit (7/9) List of questions (part b)

Below is a list of questions that can be used to audit the SCRM, concerning the topicsEvaluation and Prioritization and Governance and Management.

Evaluation and Prioritization Are supply chain risks assessed qualitatively where possible?
  Was an evaluation of the supply chain risks (e.g. top 10) carried out?
  Is the assessment of supply chain risks based on internal company figures/data/facts and not exclusively on gut-feelings and/or experience?
  Is the assessment based on external sources/databases whenever possible?
  Are the consequences of the most important supply chain risks well understood?
  Are supply chain risks assessed quantitatively, where possible?
  Are the risk assessments continually monitored and updated as changes occur?
  Are risk assessments monitored by at least two people (dual control principle)?

Governance and Management

Are there regular internal departmental exchanges when reducing or avoiding supply chain risks?
  Are there regular internal departmental exchanges regarding the measures taken to reduce or avoid supply chain risks?
  Are there clearly defined key supply chain risk thresholds that trigger response actions if exceeded?
  Are these thresholds well-known among all relevant employees?
  Are measures to reduce strategic supply chain risks regularly developed?
  Are efforts made to use alternative and multiple suppliers as much as possible to avoid single-sourcing?
  Are there plans or checklists in place that outline procedures for after a supply chain risk (e.g. supply chain disruption) has occurred?
  Is the internal responsibility and ownership of different supply chain risk scenarios clearly defined?
  Are individual components of SCRM included in target agreements between managers?

Extract from Schröder, M. (2019): Structured improvement of supply chain risk management. In: Supply Chain Management – Contributions to Procurement and Logistics, Series-Editor: Essig, M.; Stölzle, W., Kersten, W., Springer Gabler: Wiesbaden

How to audit SCRM? Conducting the Audit (6/9) – List of questions (part a/c)

Below is a list of questions that can be used to audit the SCRM, concerning the topicsTransparency of supply chain structures and processes, Information and dependencies of suppliers and Identification.

Transparency of supply chain structures and processes Are the most important, value-creating corporate processes defined (e.g. development to production to sales)?
  Is there accountability in these operational processes, i.e. are the potential risks and their impacts on different departments known and addressed?

Information and dependencies of suppliers

Is there a list of all direct upstream suppliers?
  Is the most important company data of the upstream suppliers documented (corporate headquarters, production facilities, local contact persons, cell phone numbers, etc.)?
  Are the supplier contacts with decision-making authority known?
  What are all of the value creation processes of the direct upstream suppliers?
  What are the dependencies between upstream suppliers?
  Have they been properly identified?
  Is information about the suppliers obtained on a regular basis?
  Who are the most critical suppliers (critical suppliers can be characterized as the highest proportion of sales, or as the supplier of the material for the most products which cannot be easily replaced, etc.)?
  If the most critical supplier fails, what are the financial consequences?
  How often does the operational business check whether certain deadlines have/will expire?
  How often are the supply contracts checked to see if they need to be transferred to a new company standard?
  Is information about suppliers regularly shared with other departments?
  Does an on-site visit of the most critical suppliers take place every three to five years?
  Is there a structured guidelines in place for communicating with suppliers?

Identification

Are operational supply chain risks systematically identified at regular intervals?
  Are strategic supply chain risks systematically identified at regular intervals?
  Is there a catalog for the systematic identification of supply chain risks?
  Are external as well as internal corporate risks considered during the identification of risks?
  Are the interfaces with supply chain actors considered during risk identification?
  Is it always possible to add newly identified supply chain risks to the catalog?
  Are the results of the supply chain risk identification from each individual workplace recorded in writing?
  Are the results of the supply chain risk identification from the entire department recorded in writing?
  Are risks from supply chain partners that may have a negative impact on the company considered in the identification process?
  Is the identified supply chain risk list up-to-date?
  Is the operational supply chain risk assessment complete?

Extract from Schröder, M. (2019): Structured improvement of supply chain risk management. In: Supply Chain Management – Contributions to Procurement and Logistics, Series-Editor: Essig, M.; Stölzle, W., Kersten, W., Springer Gabler: Wiesbaden

How to audit SCRM? Conducting the Audit (5/9): Defining the audit criteria and methods

When performing the audit, pre-defined auditing criteria are used to audit the respective process or system. A distinction must be made between regulatory, statutory, contractual, and voluntary requirements.

Furthermore, suitable auditing methods must be selected for the audit. In addition to surveys, checklists are used for process monitoring, as well as, for example, document analyses and random sampling. A distinction must be made as to whether the methods are carried out “on-site”, i.e. at the location of the audited organization, or “remote”, i.e. any distance beyond the physical bounds of the organization in question.

During the audits, the results achieved must be documented in a comprehensible manner and then  transferred to an audit report. In addition to the results, this should also contain the potential for improvement. In addition, the roles and responsibilities relating to auditing must be communicated and documented during the auditing process in order to comply with the auditing principle of transparency.

Extract from Schröder, M. (2019): Structured improvement of supply chain risk management. In: Supply Chain Management – Contributions to Procurement and Logistics, Series-Editor: Essig, M.; Stölzle, W., Kersten, W., Springer Gabler: Wiesbaden

How to audit SCRM? The preparation phase (4/9): Defining the auditing policy — configuration and reporting

The auditing policy must further specify whether audits are regulated using a longer-term auditing program or whether they are carried out only when required. The latter are referred to as “ad hoc audits”. Closely related to the auditing policies are the design variables of the auditing configuration, which are concerned with regularity/frequency, scope, and focus.

Reporting designs should be agreed in advance. In this regard, a suitable information and communication system should be established for all phases of auditing. The system should primarily enable general communication between the auditor or auditing team and the key person(s) responsible. To ensure unrestricted and confidential communication both within the auditing team and within the organization, appropriate information and communication tools must be available to all parties involved. In addition, an appropriate information and communication system can promote the efficient delivery of results and enable the application of the auditing methods described below.

The requisite questions for the beginning of the SCRM audit are therefore:

Scope and process of the SCRM auditing program
Have the subjects of the SCRM audit (e.g. sales or production departments) been selected?
Have the specific business aspects to be audited (e.g. logistics, supply chain management, etc.) been selected?
Have appropriate auditing techniques been defined (e.g. site visits, employee interviews, job observations, work-environment inspections, etc.)?
Is there a schedule for the SCRM audit process with the sequence, times, and duration of each individual department’s necessary approvals and access procedures?
What is the date of the SCRM audit kick-off meeting?
What is the date of the SCRM audit wrap-up meeting?
Has comparative criteria for the SCRM audit process been developed, which can be used to conclusively evaluate the audit findings?

Communication
Have all involved employees been informed of the SCRM audit schedule?
Have the physical workstations and corporate departments which will be audited been informed of the dates for the SCRM audit?
Are the communication channels for the SCRM audit defined?
Which employees will receive the final SCRM audit report?

Documentation
Is access to all the would be audited documents and details ensured?
Does the auditor have all necessary documents for the SCRM audit?
Does the auditor have any and all supplementary documents for the SCRM audit?
Have possible overlaps in content with other auditing systems been considered in order to avoid duplication of work?
Has a checklist for implementation of SCRM measures been prepared for the auditor?
Are the results of previous SCRM audits available? Where?

Extract from Schröder, M. (2019): Structured improvement of supply chain risk management. In: Supply Chain Management – Contributions to Procurement and Logistics, Series-Editor: Essig, M.; Stölzle, W., Kersten, W., Springer Gabler: Wiesbaden

How to audit the SCRM? The preparation phase (3/9): Organizational location and target setting of the audit

In addition to the responsibilities (see previous blog post), the organizational location of the auditing must be determined before beginning. In compliance with auditing principles, the auditing should be based in an independent office within the company’s structure; this can be achieved via the establishment of a separate auditing department or via integration into an existing department, such as “internal auditing”.

The objective of the audit must also be defined in the preparatory phase (ISO 2011a, p. 17). Here, the literature distinguishes between three motives for conducting an audit:

To assess compliance with standards and specifications

To assess overall effectiveness and efficiency

To identify areas of potential improvement

 Accordingly, the following questions should be answered at the beginning of an SCRM audit:

Was an SCRM Auditing Goal set?
Has a decision been made as to whether this should be an ad hoc audit or part of a continuous auditing process?
Have the SCRM audit objectives been communicated to all stakeholders?
Have all costs associated with the SCRM audit been considered? 
Are sufficient physical independent premises available to carry out the SCRM audit?      
Are all necessary information and communication technologies available to the SCRM audit team?            

Extract from Schröder, M. (2019): Structured improvement of supply chain risk management. In: Supply Chain Management – Contributions to Procurement and Logistics, Series-Editor: Essig, M.; Stölzle, W., Kersten, W., Springer Gabler: Wiesbaden

How to audit SCRM? The preparation phase (2/9): roles and responsibilities

In the preparation phase of an audit, decisions must first be made regarding responsibilities. The main responsibility for conducting audits is typically assigned to top management, usually without specifying this in more detail. However, only isolated exceptions refer to the management board at this point. The tasks to be performed vary, based on the individual norms and standards. While some are limited to the establishment of a monitoring process, others refer to the assignment of operational responsibilities and the definition and effective implementation of auditing objectives and policies. The responsibility of communicating the importance of process improvement and efficiency enhancement—the primary responsibilities of an SCRM audit—rests with top management, analogous to a risk management audit.

In addition to these primary responsibilities, the person(s) responsible for auditing must be determined. The selection must be made in compliance with auditing principles such as objectivity and independence. In addition to the auditing principles, the auditor should have certain auditing experience and, above all, methodological and technical knowledge. These strict prerequisites often lead to the formation of an auditing team in order to fully cover all requisite competencies. These prerequisites can also be applied to an SCRM audit.

As such, the questions which must be answered at the beginning of an SCRM audit are:

Was an SCRM auditing goal set?
Has a decision been made as to whether the audit should be ad hoc or part of a continuous audit program?
Were the SCRM auditing goals communicated to all interested parties?
Was it determined who would undertake the primary responsibility for the SCRM Audit?
Who will be the responsible SCRM auditor?
Has an SCRM audit team been assembled to support the auditor?
Is the SCRM audit team composed of employees from different departments?
Did the selection of the SCRM auditor consider the separate auditor qualification requirements?
Is the SCRM auditor’s objectivity ensured with regard to the performance and the review of the SCRM audit?
Is the objectivity of the SCRM audit team ensured with regard to the performance and review of the SCRM audit?
Have all the associated costs of the SCRM audit been considered?       
Are sufficient physical independent premises available to carry out the SCRM audit?      
Are all necessary information and communication technologies available to the SCRM audit team?            

Extract from Schröder, M. (2019): Structured improvement of supply chain risk management. In: Supply Chain Management – Contributions to Procurement and Logistics, Series-Editor: Essig, M.; Stölzle, W., Kersten, W., Springer Gabler: Wiesbaden

How to audit the SCRM? Preparation of an SCRM Audit (Part 1/9)

Long-term efficiency of the SCRM process can only be achieved if comprehensive monitoring of the SCRM implementation process is performed in all phases. To this end, SCRM-related auditing is a suitable method.

In risk management literature, the additional process monitoring for the risk management process is being actively discussed but has not yet been applied to SCRM. Since there has been no attempt to date to develop SCRM auditing, either within the scientific literature or in practice, this topic has been addressed as part of our research.

Extract from Schröder, M. (2019): Structured improvement of supply chain risk management. In: Supply Chain Management – Contributions to Procurement and Logistics, Series-Editors: Essig, M.; Stölzle, W., Kersten, W., Springer Gabler: Wiesbaden

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