December 17, 2018, 11:24 pm

‘Best Practice’ Supply Chain Audits

The reliable supply of equipment, spare parts, consumables and services is a significant element in the efficient and effective operation and maintenance of a plant or physical asset. There is far more to achieving results in this area than simply signing purchase orders and there are many methods that can be employed to improve performance. The objective should always be to achieve sustainable improvement and one of the best ways to achieve this is to carry out an audit on your supply chain. Experience suggests that this type of intervention pulls one of the "levers of change" for maintenance performance and can lead to long term and large scale improvements.

The Approach

A successful audit is one that accurately establishes the state of the audit subject and provides constructive recommendations for improvement with a high level of acceptance from the auditees. From Assetivity’s previous experience with supply, maintenance and asset management audits, this is only possible where the auditees are fully engaged in and committed to the audit process and therefore willing to provide open and honest answers to all audit questions. This behaviour can be promoted through the following mechanisms:

  • Clear compliance criteria – The expected compliance standards are documented prior to commencing the audit.
  • A balanced approach – The auditors recognise that all organisations have both strengths and weaknesses and strive to capture both in the audit.
  • Professional standards – Audit personnel conduct audits in a manner consistent with the principles of ISO19011:
    • Ethical conduct: the foundation of professionalism
    • Fair presentation:the obligation to report truthfully and accurately
    • Due professional care: the application of diligence and judgement in auditing
    • Independence: the basis for the impartiality of the audit and objectivity of the audit conclusions
    • Evidence-based approach: the rational method for reaching reliable and reproducible audit conclusions in a systematic audit process

The Scope

The audit should cover the supply chain holistically, from management to the shop floor and across the full breadth of supply services. The following five key areas can be used as a guide to ensure appropriate coverage:

  • Strategy – A clear and consistent vision of how the services will be provided
  • Organisation Structure – A suitable organisational structure, with clear accountabilities and sufficient resources to complete the required work
  • People, Culture and Skills
    • People and Skills – A workforce that is properly trained and experienced to execute the supply processes
    • Organisational Culture – A culture that positively motivates employees to comply with and continually improve supply processes
  • Supply Processes – An in depth look at the following:
    • Demand Management
    • Sourcing
    • Cataloguing
    • Purchasing
    • Inventory Management
    • Disposals
    • Vendor Management
  • Technology – Tools, particularly software, that support personnel in the execution of the supply processes, along with appropriate training and support

The Outcomes

An effective supply chain audit can realise the following benefits:

  • A comparison of supply performance in the different areas of your business and, potentially, against benchmarks from other organisations of a similar size and nature.
  • An agreed and prioritised action plan for supply improvement, with timings, costs and resource requirements.
  • Reductions in procurement costs and MRO parts inventories WITH improvements in stores productivity and service levels.
  • Increased plant and equipment reliability and availability.
  • More effective contract management leading to more effective supplier performance.
  • A cultural shift from a transaction processing mentality to one that focuses on strategic supply improvement and increased operational reliability.

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