Main elements of the supplier audit

Forming a standard checklist helps audit preparation. Questions can be done on the base of a checklist without forgetting some important areas. Because every relationship between a supplier and JOT Automation Group Plc. is individual, standard questions cannot be formed without compromising. Standard checklist enables custom made audits with moderate time of preparation and planning.

Main elements of the supplier audit –checklist are divided on ten different areas of investigation. Checklist is as a whole in Appendix I. Following is a summary of the steps.

1. Product

• Product details

• Testing and quality controlling

• Pricing

• Warehousing and demand forecasting

2. Customer service

• Order handling

• Delivery accuracy

• Reclamation handling

• Warranty and service support 3. Reporting and self-assessment

• Preventative activities

• Reporting

4. Company management

• Management system

• Organisation

• General process approach

• Strategy

• Development and improvement plan 5. Safety and security

6. Information technology 7. Research & development 8. Human resource management 9. Financial & accounting

Product focuses on describing the features, which affect attractiveness of the product.

These features are products quality, price and suppliers willingness for stocking.

Product quality includes issues related to expected lifetime of the product and how quality controlling is handled in the supply chain. Issues concerning price and its changes aims to point out factors that can have contribution to suppliers pricing processes. Factors can be for example currency rates and possible world market prices of raw materials. Warehousing and demand forecasting focus on inventory management of the supplier and how they are able and willing to prepare themselves for JOT Automation Group Plc.’s forecasted demand. Right provision reduces lead-times and keeps delivery accuracy high.

Customer service focuses on investigating expectations of the supplier’s ability to serve JOT Automation Group Plc. The step in question clarifies order processing, reclamation handling, delivery accuracy and after sales issues, like warranty and service support. Questions should point out effectiveness, efficiency and expected performance of handling procedures and processes.

Reporting and self-assessment investigates supplier’s preventing and controlling activities to avoid problems and develop their performance. Supplier should be asked to deliver reports for JOT Automation Group Plc. so that possible wrong measurements could be indicated, for example delivery promptness should be the same on the both sides.

Company management focuses on investigating how supplier’s management system works and how development is controlled. Area includes research to business, security, environmental and quality polices. At the same time the content of the quality and environmental manuals are investigated. If standard manuals do not exist, company should have an equivalent document, which can be conceived as a standard. Organisation, structure and general processed, are discussed and checked generally. Strategies and development plans should also be included to the audit.

However, the aim is to find and concentrate on the most essential and important issues, which can affect to JOT Automation Group Plc. Company management step concentrates on securing that the supplier will be well managed and continuously improved.

Safety and security describes supplier’s security policy. Information is handled confidentially and non-disclosure-agreement (NDA) is signed. Supplier should also have plans in case there is a fire or other similar sudden accident. These are important issues for JOT Automation Group Plc. as well and mentioned in the security operation plan.

Information technology focuses on the used information systems. Security policy for example against computer viruses must be in order. Future development and e-commerce solutions should be speculated giving more advantage for JOT Automation Group Plc. Systems compatibility is the key to the future development.

Research & development gives overall description of the supplier’s capability to support JOT Automation Group Plc. in new product developments. Clarification of procedures and information flows concerning new products and modifications should be examined to get information as soon as possible. Both sided design support will give mutual benefit.

Human resource management describes general policies concerning human resources. These are contracting, development and confidentiality agreements made with employer. Supplier’s well-treaded employees feel the trust and loyalty for their company, which will also focus to JOT Automation Group Plc.

Financial & accounting investigates supplier’s economical situation. Comparison is done against the market situation and assumed competitors. Estimating profit and future competence reduces risk to loose supplier accidentally. For JOT Automation Group Plc.’s image it is advisable that the supplier has a good reputation of its interest group, like suppliers, customers, governments, etc.

4.1.2 Supplier measurement

The goal of the supplier measurement is as important as a supplier audit. In some cases the information given by indicators can prevent possible risks and changes related to the suppliers. Both audit and performance measurements are important, because they focus on different aspects. Measurement is more a routine work and as much as possible it should be based on the information technology systems.

Measurement should not include time-consuming data handling and reporting.

System should be easy for new people and organisation to learn and to maintain.

Selecting measurement method is not a grant procedure. Finding the appropriate indicators means also finding the suitable and reliable data. Combining these two ideas can be challenging. Data is gathered straight from the information systems. If the needed information is not available systems can be modified, but development demands financial investments. Modifications can be hard to state so that relevant importance is worth of investing.

JOT Automation Group Plc. has an IT system platform, Wise, which handles all information and functions in the company. This system has been developed custom made for JOT Automation Group Plc. a few years ago. However company has grown very fast and due to this operations have become wider and complicated. Wise works well and modifications are quite easy and fast to do, thanks to a good maintenance. If we look at the system from the supplier evaluation point of view, modifications are required to run complex supplier measurement system. However most of the data can be found from the system already, but utilisation could be improved. At the present Wise gives only supplier’s delivery promptness reports.