The key to success in any business is optimizing the systems you already have instead of seeking out new opportunities. Although all facets of a business have their importance, the supply chain is unequivocally the most integral component of any retail or manufacturing company. As business strategies rely heavily on supply chain audits, they have a direct impact on a company’s operational and cost structures.
Recent changes in the logistics, trade and freight industries make internal audits more vital than ever to ensure the smooth operation of your supply chain. Supply chain audits conducted with the aid of audit firms in Dubai can help you determine areas for continuous improvement and growth and discover where you can improve your supply chain.
This article will provide you with a step-by-step guide to conducting an internal audit of your logistics and supply chain.
A Logistics and Supply Chain Internal Audit is Imperative! Why?
An Supply Chain Internal Audit entails an elaborated critique and examination of the whole supply chain process. An internal audit, according to Sedex's research, lowers non-compliance occurrences and enhances the working environment for organizations.
Here’s a quick glance at what supply chain audits aim for:
- Strengthen your relationship with suppliers
- Assessing opportunities for updating and improving service agreements
- Identifying areas for improvement in health and safety, anti-corruption, working conditions, environmental sustainability, finance, and other areas
- Increasing credibility, reliability, and trust
- Ensuring that your suppliers comply with essential operational standards
- Errors or fraud are identified and resolved
- Increasing the efficiency of your supply chain
- Assessing supply chain risks that may damage your brand and revenue
Supply Chain Internal Audits: What is the Best Way to Conduct Them?
Listed below are the steps to be followed in conducting a successful and productive supply chain audit:
1. Defining the Scope and Purpose Statement:
First, you have to ensure that all the members involved in the audit are familiar with the purpose and focus area of the audit before beginning the process.
To begin with, make sure the internal auditor understands what the purpose of your audit is, e.g., improving shipping timelines or finding bottlenecks in transportation.
Furthermore, it is necessary to establish the scope of the policy audit, which helps to specify the teams, processes, and documents that will be looked at.
2. Plan the Audit Strategy for the Supply Chain
There's no one-size-fits-all supply chain, as no two businesses are alike. Therefore, a strategy that's tailored to a particular business and supply chain must be decided and agreed upon.
When formulating the supply chain audit strategy, all of these factors must be taken into account, whether it be a physical verification or a digital audit, an analysis of grassroots-level activities or a bird's eye view of the processes. To make audits more efficient and faster, you should digitize your audit processes.
3. Input and Data Collection
Physical surveys, questionnaires, checklists, pulse-check meetings, and other methods can be used to collect relevant data once the audit scope and strategy have been decided.
In addition to aggregating internal data, an audit team should also assemble external data such as industry benchmarks and legislative developments.
It is also essential to map out the direct and indirect sources of the supply chain, according to the British Standard Institution. As supply chains become more complex, diverse, and outsourced, the risk increases.
4. Conducting a Process Review
Afterwards, a thorough evaluation and assessment of the collected data, or process, is carried out. Summarize these data using AI-powered tools and present them in conclusive reports utilizing the latest data analysis techniques.
A supply chain internal audit may reveal the following discrepancies:
- Off-season mounting of stock
- The ramifications of late suppliers
- Stock wastage and spoilage as a result of ill-planned production
- Transportation bottlenecks.
These issues can also be highlighted in the Audit Report based on priority.
5. Gaining Insights
An audit report's outcomes and key takeaways can be used by management to formulate actionable steps.
It's not a secret: an audit typically lays the groundwork for working relationships to begin with. When firms have their goods audited, they often discover where their commodities come from.
As a first step, a financial impact assessment must be completed for each concern identified in the supply chain audit. After that, if any corrective action is needed regarding a particular step or stakeholder, it can be done right away.
To Sum It Up!
Internal Audits serve a dual purpose - finding loopholes and plugging them as well as identifying areas where improvements can be made.
With 35 years of experience, Farahat and Co is one of the top audit firms in Dubai. Our clients come from a variety of industries all over the UAE. You can rely on our registered and private internal auditors in Dubai for guidance throughout the internal auditing process.
Using our customizable checklists, insightful reports, and digitized inspections, you can conduct productive supply chain audits.
Let us help you make your supply chain audit a Value Chain by ensuring every process works in your favor.