Supply chain management has become increasingly global and more complex, making risk management more challenging. To examine the challenges facing internal audit in a volatile and uncertain set of circumstances. This list below is 6 area of focus when auditing a supply chain management process.
- Planning
• Defined governance for the full scope of the supply chain.
• Definition of values and expected behaviours.
• Consolidation of supply needs to enable economies.
• Expression of user needs and specifications.
• Predicted usage based on past experience.
• Recognising key dependencies and critical points in a supply chain. - Sourcing
• Clarity on who can make supply chains decisions.
• Application of procurement rules and regulations.
• Assessing supplier track record and/or feedback.
• Supplier selection appraisal mechanisms.
• Supplier vetting checks and references.
• Competitive tendering where necessary. - Negotiating
• Contract formation and service level agreements.
• Pricing schedules with terms and conditions.
• Identification, assessment, and ownership of risks.
• Quality control and complaints process.
• Defining the use of sub-contracting with monitoring.
• Decision structure and process to agree on changes. - Fulfilment
• Ordering, logistics, and well-received process.
• Receipt of invoices with authorization controls.
• Payment terms agreed and implemented
• Application of recognized accounting practice.
• IT and data security.
• Business continuity defined and tested. - Consumption
• Application of health & safety requirements.
• Quality control measures and checks.
• Inventory and storage control.
• Relationship management.
• Exception reporting and user feedback.
• Obtaining and responding to customer feedback. - Renewal
• Supplier assessment procedures.
• Budgetary control and usage monitoring.
• Risk register updates for emerging risks.
• Balanced scorecard and KPI monitoring.
• Specifications reassessment and update.
• Learning from issues and incidents.
However, it should be noted that a successful audit is one that accurately establishes the state of the audit subject and provides constructive recommendations for improvement.