6 Areas of focus when auditing a supply chain management process.

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.

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.


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