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 can supply chain risk management be implemented?

When introducing SCRM, organizational, technological, and personnel aspects should be taken into account. At the same time, structural aspects should be aligned with the individual phases of the SCRM process—risk identification, analysis, management, and control (process). Method catalogs were created as a further component

Relevant Aspects  
Personal
  • Awareness of SCRM should be raised among employees
  • Heterogeneous team composition is advantageous (i.e. representatives from purchasing, supply chain management, IT, quality management, etc.)
  • Team members must have sufficient capacity (available working hours)
Organization
  • Integration of SCRM into existing units (e.g., Purchasing, Global Distribution Fulfillment)
  • Support of the project by management
  • Appointment of a project manager who coordinates the SCRM process, collects necessary data/documents, and consolidates the results
  • Regular supplier evaluation—especially for critical suppliers. Clustering according to cash turnover is recommended
  • Complete documentation (e.g. defective rate, special releases, delays, etc.)
  • Regular exchange of information with suppliers such as forecasts, ERP system information, etc.
IT
  • SCRM process support from an IT system
  • Integration into existing IT systems (e.g. ERP) and access to the same data sources (e.g. sales and purchasing) can be advantageous
  • Conducting audits to identify supplier weaknesses

For the SCRM implementation process, the first step is to raise awareness among employees. Internal company events and attendance at specialist conferences or external training events on this topic are, for example, suitable for this purpose.

In addition, a heterogeneous team composition is ideal. If, for example, employees from purchasing, supply chain management, IT, and quality management work together on the SCRM team, a cross-departmental exchange of information is ensured. Additionally, the hierarchical and functional composition of the SCRM team must be considered.

In general, it must be ensured for the implementation process that the team members are motivated and have available capacity (working hours) so that the employees involved do not see the implementation of an SCRM system as an additional workload.

Furthermore, an SCRM team leader should be appointed to coordinate the SCRM process, collect the necessary data or documents, and consolidate the results so that continuous processing of the SCRM is ensured. The associated shift of decision-making authority to the SCRM team is also critical to performance success. Management support for the SCRM is particularly critical here.

From an organizational perspective, a decision must be made at the start of implementation as to whether the SCRM should be integrated into the existing organization or whether a restructuring should be sought. It should be noted here that, particularly in the case of SMEs , integration into an existing department is seen as advantageous. In addition to an increase in the acceptance of SCRM-related measures by other employees, a better exchange of information from this step can be guaranteed.

Furthermore, regular supplier evaluations, especially for critical suppliers, (e.g. clustering by sales) should be integrated into the implementation process, accompanied by complete documentation on aspects such as error rates, special approvals, delays, etc. A continuous exchange of information with suppliers (e.g., via forecasts or ERP system) helps to identify possible failure risks at an early stage.

In terms of technological implementation, the SCRM process should be supported by an easy-to-use IT system; however, isolated solutions should be avoided here. Access to the same data sources by different departments, such as sales and purchasing, also promotes an exchange of information. Associated reporting is also critical for SCRM success. The frequency of reporting, the volume of reports, and the specified group can promote or hinder the SCRM process.

Excerpt from Kersten, W.; Feser, M.; Schröder, M. (2013): Situationsadäquate Implementierung eines Supply Chain Risk Managements, Bundesvereinigung Logistik e.V. (BVL) – Schlussbericht des geförderten Vorhabens 17234N.

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