Over the last year I have published a number of Blog updates concerning Good Business Growth in the supply chain. Focusing on how  buying teams and their vendors can secure good quality products at a competitive price, delivered on time and supplied by companies that care.

I thought I would now try and bring some of these LinkedIn posts together in one activity matrix tool to secure understanding and integration in the business.

Whilst I was working for Tesco International Sourcing we worked extensively with the RACI Chart tool:

Responsible: Who shall achieve the task?

Accountable: Who is ultimately answerable?

Consulted: Who is the expert?

Informed: Who is to be kept up to date?

I found RACI charts to be a practical and concise way to determine who does what. They are great for clarifying roles and responsibilities in cross-functional/departmental projects and matrix processes.

The Supply Chain in all companies are moving out of their silos of function, it’s no longer possible for a colleague to just focus on their own specific narrow operation, and to be fair I have not really met anybody who thinks like this anymore! The RACI Chart is indispensable in helping the Buying teams, the Factory management and Logistic operators secure Good Business Growth.

I have completed a RACI below using 9 titles from my previous posts, where I have advocated what needs to be action in the modern supply chain. In this chart example I am more interested in securing the understanding of RACI than actually who does what – this will always be different according to organisations and their structures. A RACI is an excellent one page tool to present and agree on who the hell is doing what!!  If its a well thought out and compiled chart then it provides a  great way to start the task clarification process and then finalise/maintain activities in the day to day operations of the Supply Chain.

Conclusion:

Whilst writing different LinkedIn posts, I was very conscious that they could be read as conflicting with each other and I would then glibly bring them all together under one banner of Good Business Growth. The RACI Chart I hope avoids this glibness in a practical, concise and easy way – everybody should be aware of their own and their colleagues’ responsibilities and accountabilities. Of course in the above example, point 10 needs to be added for the traditional commercial, logistic and technical daily operations – oh for those days when we worked in our silos of function, we didn’t need a RACI then!!!

Mark K. Astley Robert Vernon Associates Ltd..

At the supplier – buyer factory visit what should be the agenda for a business meeting that shall also include working conditions, social and environmental compliance? Based on my own experience, whether it was textiles, furniture or ceramic/metal etc. there are basics that provide a framework for both parties to work with when conducting factory visits:

• The Business Report
• Full compliance audit reports – 2nd and 3rd party
• Social and Environmental performance
• Child Labour
• Sub Supplier Management

1. The Business Report: To assure maintenance and continuity in compliance at the factory there shall be a written document at every visit. A brief, points driven hardcopy produced by the buyer before they depart that follows up previous reports, business decisions, visit results and latest corrective actions with noted responsibilities for the supplier or buyer to implement.

The  Compliance Agenda points for a factory visit:

2. The Audit Reports – 2nd and 3rd Party: The results and notes from current and previous compliance audits conducted by your own or 2nd/3rd party organisations are reviewed. What were the audit results and more importantly actions taken since; for non-conformances, improvements required or suggested? How has the supplier or even the buyer addressed these issues and implemented the requirements. Make a note to follow up these issues during a visit to the factory floor or production office.

3. Social and Environmental Performance: This part of the factory visit is about touring the shop floor and walking through all or a specific work section; making sample checks, quick observations securing the factory compliance in working conditions, safety and environmental performance as per the following suggestions:

• Are machines safe and operated in a safe manner
• Are emergency evacuations clear and apparatus in working order
• Is the shop floor clean and tidy
• Is the factory operator personal protection equipment in use
• What are the discharges levels – noise, air and water? Does it look and smell okay. Are monitoring records maintained?
• How are chemicals stored, handled and used
• Medical emergency equipment and materials are available e.g. first aid box.
• Conduct sample checks of the time keeping and attendance systems – follow up one or two randomly selected operators. Are their working hours recorded and what is the level of their overtime.

4. Child labour:

• Conduct random sample checks on employee age records – are they maintained and can these operators be identified in the factory.
• Are age records maintained with verifiable documents eg id cards, birth certificates etc..
• Is the factory employing Young Workers – how does this work within the law, what are their ages.
• Can employment records be obtained immediately on any factory operator who ‘looks’ young.
• The Factory management understand the routines when there are potential issues of child labour being identified.

5. Sub Supplier Management:

• Secure that the supplier maintains accurate and up to date records of its vendors who supply semi-finished, components or materials that are used in  the buyers finished products.
• Check a randomly selected vendor:
• When was the last visit by the factory management to one of its vendors?
• Has the supplier secured the national legal and buyer requirements at its vendor
• Have corrective actions been identified at the supplier’s vendors, how have theses been followed up and secured by management.

From Audit Project to Business Process

The above are a suggestion to include in a supplier visit agenda. It is not a full  audit, but rather a quick follow up and push for the factory and the buying team to keep compliance as a 365 days assurance. For both parties it’s a good temperature check on performance and highlight where things may be going astray. The results of the check can then be passed to more specialist colleagues for further and more detailed examination if serious areas of concern were noted during the visit.

Adding these points to factory visit agendas every time  would initially increase  the pressure on the supply chain. Eventually it would be managed on a day to day operational level – no longer a compliance project but a factory and supply chain process.

The main things to consider:

• Conduct sample checks – random selection of operator records, factory departments, vendor performance reports.
• Make it an observation exercise with aim to improve not punish
• Always start with the previous visit actions
• Depending on the regularity of visits, selected points can be reviewed on a rolling basis rather than every time.
• Drive the issues of good working conditions, social management and environmental performance into the DNA of the supply chain as being good for business growth.

Conclusion:

The factory visit by the buying team should be a very hands on operational activity. It is an excellent opportunity to achieve alignment if the meetings are within a structured framework of a practical agenda. The above can be one part of a factory visit agenda that is concise, practical and can be conducted through existing resources including commercial, logistics and technical personnel

For both the buyer and suppliers, the brand protection of the retailer and its customers is vital. In the supply chain this is everybody’s responsibility and everybody can play a part. When it comes to compliance I have seen too often that this is left to a company CSR colleague and very often a third party auditor to secure and maintain a supplier performance. This is not practical for 365 days or even fair and is actually a big risk for society, the environment and the business!!

Mark K. Astley

In the supply chain world of quality, code of conduct and ethical compliance the drive to assure and secure has been through the conducting of audits.

For the second and third party auditor organisations, the last 20 years has been a very profitable one. An audit checklist under an arm provides a powerful tool for descending upon a factory and asking the prerequisite questions about quality inspection reports, the contents of the first aid box and where is the factory licence!

However, audits are only a snap shot of an organisations’ compliance. They do have some role in improving operational performance, but essentially an audit identifies a non compliance and raises corrective actions.

Businesses are now well practiced in the art of receiving auditors and their checklists; they have their rapid action teams on standby with libraries of files, procedures, certificates, licences and environmental reports!! This has resulted in in the supply chain improvement of securing and assuring. However, it has to be said its also a ‘cover their bottoms’ activity in the event of a brand attack.

Except for the individual incidents that spring up every now and then, the supply chain breathes easy; the specialist auditors and compliance teams can be left in their little corners to carry on undisturbed with their projects and the factory/merchandising/sourcing teams can carry on with their jobs undisturbed by the nuisance of quality measurements, age certificates and internal factory noise reports!

This level of compliance in the supply chain provides a foundation to move from auditing projects by the specialists to a daily process management by the buyer and vendor teams at all levels of business. Organisations should be moving from handling the auditing snapshots to managing and improving compliance – 365 days of the year.

What should be the elements to a 365 days compliance:

• All parts of the supply team(buyer and supplier) are responsible for compliance, not just the specialist compliance team.
• The management of compliance shifts from an audit project to a maintenance/improvement process
• The compliance requirements should be segmented into levels of priority and regularity to secure resources, capacity and capability.
• The requirements should act as a WHY and not just a tick in checklist!
• The Buying Teams should be actively involved in their vendor compliance – poor purchase planning by the buyers causes quality, ethical, environmental and delivery security problems.
• The specialist team participation in compliance is not on daily operational issues.
• Corrective actions are not separate procedures form the daily operational work and should not be an admin exercise in completing a CAR( corrective action report) form!
• Compliance to quality, social and environmental requirements are seen as contribution to business growth and not a cost.

Factory and supply chain audits are here to stay in the short to medium term as an in depth snapshot on operational performance. The long term goal should be to move away from the audit activity. Compliance is part of the business – making a contribution to an organisation’s competitive advantage, improving the experience, opportunities and skill set of buyers, technicians, factory operators throughout the whole supply chain.

Compliance to quality systems, code of conducts and legal requirements are actually about efficiency and productivity – it is a vital process in business. The days of compliance being a project delegated with relief to a specialist should be numbered.

How can this be developed and achieved? Well hopefully I have been describing this in my previous articles and will continue to do so in future articles. Its Good Business Growth.