Companies often rely on complex and geographically dispersed supply chains to source materials, manufacture products and deliver them to customers. However, these widespread operations often come with a range of risks, from minor vendor miscommunications to major global disruptions. But businesses can only improve what they can see — whether it’s fixing a current problem or preparing for a future risk. Supply chain audits can provide the visibility businesses need to identify weaknesses in their supply chains and create a roadmap to fix them. But audits come with their own set of challenges and must be deliberately planned and conducted to ensure that business leaders are given accurate and detailed information. Only then are leaders prepared to make the crucial decisions that will strengthen their supply chains today and prepare their operations for tomorrow’s disruptions.

What Is a Supply Chain Audit?

A supply chain audit is an in-depth assessment of all the operations that make up a business’s supply chain. A supply chain audit’s primary goal is to identify weaknesses, including bottlenecks, disruptions, unmet customer expectations and any other inefficiencies that cause slowdowns or impact the bottom line. For audits to provide decision-makers with the insights they need to address those weaknesses, businesses must prepare a robust audit plan and conduct it with intention. Otherwise, the audit may only identify symptoms of inefficiencies, leaving businesses to waste time and resources on damage control rather than improving root causes. Depending on their needs and capabilities, businesses can bring in outside auditors, use internal supply chain experts already on staff or rely on a mix of the two to conduct their supply chain audits. But whoever conducts the audit needs to be objective and prioritize the ultimate goals — to identify weaknesses, plan corrective actions and create a more resilient supply chain.

Key Takeaways

  • Supply chain audits assess every step of a business’s supply chain to find weaknesses and areas for improvement.
  • Audits should be deliberately prepared and conducted to avoid visibility gaps and inaccurate or uninformed conclusions.
  • Once audits are completed, business leaders can use the findings to implement corrective actions and create a stronger supply chain.

Supply Chain Audit Explained

Supply chain audits examine every link in a business’s supply chain, from the procurement of raw materials through the final delivery of goods to customers and every process in between, including production, warehousing, inventory management and distribution. Without effective supply chain management, supplies, goods and information cannot flow efficiently through an organization, causing bottlenecks and slowdowns and ultimately reducing customer satisfaction. The Gartner 2022 Audit Plan Hot Spots report lists supply chains as one of 12 current key risk areas for auditing, citing “global shortages of key goods and materials and heightened supply chain disruptions” as drivers of rising costs.

For example, a supply chain audit can reveal inefficiencies in a business’s warehouse operations caused by excess inventory, leading to higher carrying costs and potential delivery slowdowns from unorganized and cluttered shelves. With the increased visibility enabled by an audit, managers can make better informed decisions on any potential changes to logistics operations and optimize warehouse space, reduce costs and speed up deliveries. In addition to general efficiency fixes like these, audits give managers insights into where and how to make improvements in areas like health and safety, sustainability, vendor relationships, identifying fraud and more. Before conducting an audit, businesses should plan the scope of the audit to ensure that every area that could benefit from deep analysis is included.

Why Perform a Supply Chain Audit?

Supply chain audits are an important way for businesses to maintain best practices and continually improve their operations. Audits can also help ensure that operations are evolving alongside changing market trends, such as shifts in demand, supply chain disruptions caused by unexpected resource scarcity, changes in global trade or the nearly countless other factors that can affect the sensitive supply chain ecosystem. These enhancements can also improve relationships among business partners — including vendors, distributors, third-party logistics (3PL) providers and other partners a business relies on — by providing increased transparency and a clear understanding of the business’s needs. Through regular auditing and open communication, businesses can maintain an optimized and streamlined supply chain that benefits all parties involved. Whether for today’s inefficiencies or tomorrow’s risks, supply chain audits provide valuable insights into the entire supply chain, enabling organizations to improve performance, mitigate potential negative impacts and enhance overall operational efficiency.

Supply Chain Audit Benefits

Most findings from a supply chain audit can be used to inform business leaders’ decisions on improving operations and creating a more efficient operation. Here are some specific fields to explore for inefficiencies when preparing, conducting and analyzing an audit, as well as potential benefits to be realized.

  • Bottlenecks and inefficiencies: Any steps in the supply chain that cause delays or slowdowns can be identified with the data collected during an audit. Once these areas are identified, businesses can implement solutions to ease slowdowns and increase efficiency and the flow of goods. For example, a supply chain audit might identify an overcrowded loading dock without enough open bays for incoming delivery vehicles. Once this issue has been identified, the business could extend its warehouse hours to increase the flow of goods onto delivery.
  • Quality control: An audit can help ensure that manufacturers and their suppliers are meeting quality and compliance standards. This limits the number of defective products that reach customers and lowers the likelihood of recalls or other quality issues that can harm a business’s reputation.
  • Supplier relationships: Supply chain audits can do more than just identify which suppliers are providing the highest-quality services and goods. They can also demonstrate to favored suppliers the business’s commitment to high quality and lead to stronger and more trusting relationships. This, in turn, can potentially lead to better contracts or more reliable and faster services.
  • Risk management: Supply chain audits help show the diversity and flexibility — or lack thereof — in a company’s supply chain and can help identify potential risks, such as an overreliance on a single vendor or geographic location that could be disrupted by a natural disaster. By identifying these supply chain risks, businesses can create contingency plans, such as diversifying suppliers, to mitigate the potential damage these risks can cause.
  • Sustainability: Audits can help identify areas that create high levels of physical waste or inefficient energy usage. By improving these areas, businesses can reduce their environmental impact, lower their utility costs, increase their reputation with eco-conscious consumers and stay ahead of new or changing sustainability standards.
  • Customer satisfaction: When a supply chain improvement is made, customer satisfaction often improves alongside it. Faster order fulfillment times, higher-quality goods and more reliable order estimates are all benefits that can stem from improvements identified during a supply chain audit.

Preparing for a Supply Chain Audit

Before conducting an audit, businesses must carefully plan what the audit will cover, as well as who will conduct it. Rushed planning can lead to incomplete information and the potential for misunderstanding, raising the likelihood of undiscovered inefficiencies or misguided “fixes” that create more problems than they solve. Here are some common steps to take to properly prepare for a supply chain audit.

Identify the Scope of the Audit

Supply chain audits can be as comprehensive or focused as a business needs in order to address its specific supply chain challenges. Is the audit only looking at suppliers or distributors or is it covering the entire supply chain? Many analysts create visual diagrams to map out their supply chain in an easy-to-understand way, known as process mapping. By mapping everything ahead of time, the auditors can see exactly where and what the audit should focus on. This avoids the need for clarification later in the process and helps auditors collect the most relevant information.

Select a Team to Conduct the Audit

After the process mapping is complete, the business should select a team to conduct the audit. This team should comprise impartial auditors who could be external supply chain experts and/or internal staff with relevant expertise who will give a detailed and honest report on the ins and outs of the business. The auditors must also be skilled communicators, as they will need to both collect information from many parties and effectively present that information to stakeholders. If the reports are unclear, decision-makers may struggle to glean useful insights from the audit, draw the wrong conclusions and incorrectly implement suggestions from the team.

Collect Relevant Data and Documents

To ensure that the audit is comprehensive, companies should prepare relevant data and documents for the auditor or auditing team beforehand. This can save time and effort and also indicate where the business lacks supply chain visibility and where it is or isn’t following applicable compliance standards for recordkeeping. If a company begins an audit without collecting the relevant information, it can make for a slow and incomplete process, rife with frustration for both auditors and stakeholders waiting to see audit results.

Develop a Checklist for the Audit

A checklist can help ensure that every party involved with the audit — from the auditors to the stakeholders who will receive the final report — understands what needs to be done and how the audit will be conducted. This ensures comprehensive data collection from every relevant part of the supply chain and reduces the likelihood of information gaps. A checklist can also give auditors an outlined plan, keeping data organized and easier to track. This minimizes the risk of unexpected changes in the middle of the auditing process, as every relevant party has had the chance to give input and make suggestions before the audit starts, not when it’s too far into the process to make changes without causing delays.

Conducting the Supply Chain Audit

After strategies are mapped out and the team is assembled, it’s time to conduct the audit. The audit itself will involve a systematic review and analysis of the supply chain, and these tips will help the audit stay focused on efficiency, finding areas for improvement and ensuring that the business’s standards are met.

Interview Key Personnel and Stakeholders

Interviewing key personnel and stakeholders provides valuable insights into the inner workings of the supply chain because they are directly involved in the business’s day-to-day operations. By talking to suppliers, logistics providers, internal team members and other relevant parties, auditors can gain a deeper understanding of the processes and systems in place to glean insight into potential risks and vulnerabilities from front-line observers. Auditors can also hear suggestions for improvements and optimization from the people who will be directly implementing them. Interviews provide valuable insight into business relationships and any roadblocks between parties that create inefficiencies. Because of their hands-on experience, key personnel and stakeholders are a common place for auditors to begin their analysis.

Evaluate the Effectiveness of Supply Chain Processes

Supply chain processes are typically grouped into five categories: procurement, production, transportation, warehousing and distribution. By assessing the performance of these areas, auditors can identify potential vulnerabilities that may be impacting the overall supply chain. Auditors often track performance by comparing key performance indicators (KPIs), such as inventory turnover rates and delivery times, to establish benchmarks and determine how KPIs have changed over time. If performance in any area is trending in the wrong direction, auditors can dive deeper into the data and find out exactly where and why expectations aren’t being met. Once those areas are identified, the business can work on improving them, which, in turn, will improve overall efficiency and customer satisfaction.

Identify Potential Risks and Vulnerabilities

Risks and vulnerabilities can arise from a variety of sources, and audits can help businesses take proactive steps to mitigate the potential impact from disruptions, including geopolitical events, natural disasters, cyberattacks and more. Supply chain audits can also protect businesses from reputational vulnerabilities by ensuring that the quality of goods remains high and any internal ethics standards — such as environmental or health and safety standards — are being met across the organization. The results of an audit can guide businesses to develop contingency plans and mitigation strategies by taking steps to diversify their supplier base, improve quality control processes and implement more robust cybersecurity measures, for example, before vulnerabilities become larger problems.

Assess Compliance With Relevant Laws and Regulations

Assessing compliance helps businesses ensure that their supply chain operations adhere to all relevant laws, regulations and industry standards. This is especially important for international companies that must follow different standards for the various regions in which they conduct business, as well as health care and financial companies that are entrusted with protecting sensitive personal data. Supply chain audits can also evaluate businesses on a wide range of compliance issues, including labor practices, environmental standards, product safety and more. Compliance has become an important area for audits, as environmental standards continue to evolve at a rapid pace. By regularly auditing the supply chain for regulatory issues, businesses can identify any deficiencies and recommend improvements to ensure that the company meets its obligations, protecting the company’s reputation and reducing the risk of legal or financial liabilities.

Analyze Data and Metrics

Data and metrics can be used to track performance throughout the supply chain. Some common metrics analyzed in a supply chain audit are supplier performance, lead times, order accuracy rates, inventory levels and transportation costs. Analyzing this data allows businesses to gain a comprehensive understanding of their supply chain performance and compare their performance with competitors, industry benchmarks and historical trends. This data can come from internal measures, but many auditors also use external data, such as supplier self-audits, as part of their reports. This can provide a more detailed view of the supply chain and catch any disparities among business partners’ records. But external data can sometimes be misleading or biased, so context is key when analyzing these metrics.

Knowing is Half the Battle

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Analyzing Findings and Reporting Them

Once a supply chain audit is complete, the audit team analyzes the findings and reports them to leaders, stakeholders, managers and any others who can use the information to strengthen the supply chain. This stage of the audit is critical, as miscommunications in the report can leave decision-makers with an inaccurate view of their business, leading to poorly implemented or misinformed strategies that can compound problems rather than solve them. Here are some common steps to take to properly analyze and report the results of a supply chain audit.

Summarize the Results of the Audit

Hands-on auditors likely have different expertise than the stakeholders who will receive the audit report. Therefore, the report should include a high-level summary of the results that doesn’t require a deep understanding of the auditing process and methodology. This way, stakeholders and business leaders can easily understand the findings and prioritize which weaknesses and vulnerabilities to address first. An accessible report can also reduce the risk of miscommunication when implementing strategies to address the report’s findings — both from the top down and among departments. Much of the information in a supply chain audit is complex and far-reaching, so a report that starts with a high-level summary and allows business leaders to delve into more specific data as needed and at their own pace is critical to maximizing the impact of the audit.

Identify Areas for Improvement

Most businesses regularly develop strategies to improve their operations, but disparate strategies implemented without a big-picture plan can lead to chaos and flawed solutions. Audit reports can show many vulnerabilities at once to help managers prioritize and fix problems without creating new complications. For example, a business that wants to speed up its manufacturing process may be planning to invest in more efficient equipment. But a supply chain audit can show other factors that may be contributing to the manufacturing slowdown, such as a bottlenecked procurement process that leaves manufacturers without enough raw materials to produce goods at capacity. By taking a big-picture view of operations, the business can improve its procurement process and increase production without investing in new equipment. Companies can use audits to identify weaknesses throughout their organization and predict how changes will influence other workflows before prematurely making investments or unnecessarily transforming the supply chain.

Develop Recommendations for Corrective Actions

After weaknesses have been identified, businesses can plan specific actions to increase the efficiency or effectiveness of the targeted areas. Auditors and internal staff often have the expertise needed to develop strategies, but some businesses also enlist outside subject-matter experts, such as logistics companies or regulatory experts, to identify best practices and plan solutions. Regardless of who is developing the strategies, recommendations should be specific and achievable and include a plan to measure and verify results at a predetermined time. Including recommendations in the audit ensures that stakeholders have a starting place to address the issues identified by the audit. Business leaders can also take the lessons learned from these suggestions and apply them to other areas of the company to take a proactive and organization-wide approach to increase efficiency, reduce costs and improve customer satisfaction.

Prioritize the Recommended Actions

Businesses can invest only so much in corrective actions before straining resources. Every business has its limitations and therefore must set its own priorities when making improvements. For example, a company may want to prioritize diversifying its suppliers if all its current vendors are in hurricane-prone areas and storm season is about to begin. When improving the supply chain, businesses often weigh the urgency and likelihood of a disruption against the resources required to improve the weakness. Stakeholders may also want to run additional financial analysis to calculate returns on investment (ROI) or forecast impact over time when prioritizing improvements.

Present the Report to Management

Business leaders and top decision-makers may be the ones developing the big-picture strategies to improve the supply chain, but managers will likely be the ones responsible for the direct implementation of corrective actions in day-to-day workflows. Presentations should cater to managers’ needs and provide a detailed look at the specific findings, recommendations and priorities relevant to each affected manager’s department. The presentations may also include a discussion of the potential impacts of the identified issues and proposed changes and give management a chance to bring up any overlooked problems. This helps to ensure that management understands the significance of the audit’s findings and gives them an opportunity to ask questions or request additional information before business leaders allocate resources, assign responsibility and establish timelines.

Implementing Corrective Actions

A supply chain audit is only considered successful if it leaves the supply chain stronger than it was before. To achieve that, businesses need to take what they’ve learned and parlay it into action. Here’s how to help ensure that improvements stick and are regularly monitored after implementation.

Assign Responsibility for Implementing the Actions

Choosing the wrong team can make the difference between great results and a failed strategy. Depending on the complexity of the recommended action, individuals or full teams may be required. However, responsibility is assigned, clear roles and accountability to the right people are critical when implementing corrective actions. This ensures that no elements of the plan are overlooked and that expertise is properly applied. Assigning responsibility, however, doesn’t preclude collaboration as part of the strategy, because corrective actions may require cooperation among internal teams as well as input from external parties, such as suppliers or regulatory agencies.

Develop an Action Plan and Timeline

Improvement strategies must have a concrete action plan and timeline or they risk becoming resource drains that never achieve their goals. Stakeholders and the individuals or teams responsible for implementing the specifics of the plan should work in close collaboration. This can confirm that everyone understands the strategy and that the goals are achievable in a realistic time frame. But even plans that are perfect on paper may experience delays or unforeseen complications and should be regularly reviewed and updated to ensure that progress is being made and the desired outcome is still worth pursuing. Ongoing adjustments and progress updates should be explored through scheduled meetings among the responsible teams and plan designers.

Monitor the Progress of the Implementation

Audit teams should regularly monitor progress to make sure that plans are being effectively implemented and the results are in line with expectations. Regular meetings between business leaders and the implementation team can help keep progress on track and provide opportunities for the parties involved to adjust the strategy if complications arise. To effectively monitor progress, teams should establish clear milestones and timelines for tracking relevant KPIs, such as lead times. This helps identify any issues or challenges that may arise, giving managers the tools they need to quickly course-correct before hiccups become major issues.

Conduct Follow-up Audits to Verify the Effectiveness of the Actions

Businesses should not view supply chain audits as a one-and-done strategy. Instead, they should conduct regular follow-up audits to verify that operations continue to improve. Corrective actions may have had unforeseen consequences further down the supply chain that need to be addressed, such as a streamlined manufacturing process putting more pressure on delivery fleets to deliver a higher volume of goods. Not only are follow-up audits essential to ensuring that previous corrective actions have been successful, but they also help maintain high performance in the face of changing supply chain dynamics. New best practices, shifts in demand or geopolitical changes may make last year’s perfect supply chain strategy obsolete. Regular follow-up audits help businesses stay ahead of the curve — and the competition.

Supply chain audits must be planned, conducted and analyzed with intention to address the specific needs of the business. Then, businesses can make appropriate improvements to create a more resilient supply chain.

Supply Chain Audit Best Practices

Supply chain audits are not one-size-fits-all processes and should be customized to address the specific challenges that businesses face. But some best practices are nearly universal and should be considered when planning and executing a supply chain audit.

  1. Establish clear objectives in line with company values. Audits should begin with an outline of which areas will be analyzed, as well as concise goals that align with a company’s values. For example, a business can conduct a supply chain audit to find efficient ways to reduce its carbon footprint and become more environmentally sustainable. By laying out the audit’s scope and expected outcome, both business leaders and auditors can remain on the same page.
  2. Maintain open lines of communication. Communication is key throughout the auditing process, and auditors must remain in contact with stakeholders, employees and external parties, such as board members, front-line workers and regulatory agencies. This is especially important for companies with fragmented supply chains and siloed operations, as auditors will need visibility to generate an accurate and detailed picture and give insightful and applicable suggestions for improvement. When analyzing a business that uses a 3PL, for example, an auditor must have an open line of communication with the provider to ensure an accurate view of its part of the supply chain.
  3. Use a risk-based approach. A risk-based audit helps businesses prioritize weaknesses that present the biggest threat, whether that threat is financial, legal or reputational. This way, companies can effectively allocate resources to address their most critical vulnerabilities first and create contingency plans to mitigate the impact of weaknesses that will take longer to fully resolve. Say a supply chain audit reveals that a business only uses freight ships for distribution to international retail locations. By diversifying shipping methods to include air freight, the business can minimize the risk of port congestion slowing down its distribution operation.
  4. Stay objective and independent. Supply chain audits should be conducted by unbiased and independent auditors. If a business is relying on internal staff, rather than external auditors, for example, it is important that they have the independence and access necessary to conduct an impartial audit. This helps to ensure credible findings that paint a realistic picture of a business’s internal operations — even if they include hard or uncomfortable truths. Auditors must also be sure to check the accuracy of data, from both external and internal sources, to make sure that any biased or incomplete records aren’t harming the overall validity of the report.
  5. Turn detailed data into accessible reports. Effective reporting is important so that stakeholders fully understand the audit’s findings, and corrective actions are well-informed and focused on root causes of issues, not superficial symptoms. An order fulfillment report that spends more time explaining pages of data than discussing why orders are delayed, for example, may not be as insightful or helpful when the time comes to fix inefficiencies. Reports often focus first on clear and concise high-level overviews with easy-to-follow charts and graphs before engaging with stakeholders on detailed specifics and suggestions for improvement.
  6. Leverage technology. Technology and modern business platforms, such as enterprise resource planning (ERP) platforms, can enhance supply chain audits by giving auditors end-to-end visibility with real-time and historical data from every step of the supply chain. More accessible and accurate business metrics and KPIs can speed up audits, generate custom reports and enhance suggestions for improvement. For example, auditors with detailed historical data stored in an ERP system can track trends over time and see how changes to the supply chain impacted measures like productivity, costs and customer satisfaction.

Supply Chain Audit Challenges

Auditing the supply chain can present challenges, especially for businesses with complex global supply chains. Here are some challenges businesses should expect and prepare for when planning a supply chain audit.

  • Lack of visibility: Audits rely on a plethora of data to identify weaknesses and provide suggestions on where improvements can be made. Businesses without a robust and accessible system for storing and retrieving data may find it challenging to provide auditors with all the information they need to create a thorough audit. Businesses that plan to conduct regular audits will likely need a sophisticated platform to store and organize their data, such as a cloud-based ERP system.
  • Supply chain complexity: Many international businesses rely on complex global supply chains, but even domestic operations will likely include multiple parties that can present challenges when tracing products and materials through the supply chain. For example, a business may not be able to identify why its goods are not meeting industry standards without tracing supplies back to each of its vendors and analyzing the raw materials each provides. Complex supply chains will likely require longer and more comprehensive audits before businesses can benefit from their findings.
  • International barriers: Global supply chains may come with language or cultural barriers that auditors will need to navigate to understand processes, interview overseas staff or track regional regulations. International companies should plan for slowdowns or delays in auditing international operations, such as waiting for business hours or available translators to conduct interviews with warehouse managers stationed abroad. The rise of cloud-based and remote workstations has ameliorated these challenges, but they may still require workarounds or extra planning to overcome.
  • Impacts on productivity and costs: Conducting supply chain audits can slow down productivity, tie up resources and cost businesses money. For smaller companies, this can create challenges, especially since they must also budget for post-audit improvements, which may not have clear price tags until after the audit is completed. For instance, a smaller manufacturer may be able to afford an audit but may not have room in the budget for the recommended higher-efficiency equipment until the following year.
  • Balancing standardized methods with customized results: Balancing efficiency and speed with addressing a business’s unique problems can present a challenge to auditors. Most businesses don’t want audits to continue indefinitely, as the goal is to use the audit’s findings to improve operations. But most businesses also don’t want generic or rushed audits, which can lead to unhelpful or irrelevant suggestions. Businesses must find the balance between standardization and customization that works for them, especially when comparing findings with industry benchmarks or regulatory standards.

Improve Your Supply Chain at Any Stage With NetSuite SCM

Achieving continuous supply chain improvement can be challenging, especially for businesses that rely on large and/or global operations to source, manufacture and deliver their goods. NetSuite Supply Chain Management (SCM) can help businesses achieve the end-to-end visibility necessary to conduct thorough supply chain audits. NetSuite SCM allows users to access data through customizable and easy-to-use dashboards, keeping relevant information accessible and secure for all authorized parties.

NetSuite SCM is an integrated business management software suite that can help streamline supply chain operations and improve efficiency and effectiveness through better inventory management, reduced lead times and other improvements. With NetSuite SCM’s cloud-based platform, auditors, staff and business leaders can access real-time supply chain data from anywhere and easily communicate and share data with suppliers and distributors. NetSuite’s SCM helps businesses keep customers satisfied and goods flowing through the supply chain.

Supply chain audits are a critical tool for businesses to remain competitive by identifying potential risks and vulnerabilities. By conducting regular audits and implementing corrective actions informed by the audit’s findings, businesses can reduce costs and improve their overall supply chain performance. However, supply chains can be complex, and auditing them can present challenges and often requires a significant investment of time and resources.

To maximize the benefits of a supply chain audit, businesses should deliberately plan the scope of the audit and conduct it with focused precision, often leveraging modern business platforms and external expertise. When planning, conducting and analyzing supply chain audits, it is important to remember their primary goal — to help businesses achieve a competitive advantage and drive long-term success by creating a more flexible and resilient supply chain, a must in today’s rapidly evolving business environment.

Supply Chain Audit FAQs

What is the role of internal audits in supply chains?

Internal audits provide an independent and objective assessment of a company’s internal supply chain processes and procedures. A supply chain audit’s primary goal is to identify any potential risks or vulnerabilities in the supply chain and offer recommendations for improvement. Audits also help companies ensure compliance with regulatory and industry standards and improve overall operational efficiency.

What types of risks can be identified through a supply chain audit?

Supply chain audits can be customized to identify risks unique to businesses, but some common risks discovered during supply chain audits include not meeting compliance standards, cybersecurity weaknesses, reputational risks and supply chain disruptions caused by geopolitical changes or natural disasters.

How can the findings of a supply chain audit be used to improve supply chain performance?

Supply chain audits identify weaknesses and include recommendations and targeted solutions to increase efficiency, reduce costs and mitigate potential risks. This can lead to improved supply chain performance and better overall business outcomes, including increased customer satisfaction and a more streamlined supply chain.

How can supply chain audits be used to ensure compliance with regulations?

Supply chain audits collect far-reaching internal data to ensure compliance with regulatory standards. Audits can also ensure that businesses are keeping accurate and up-to-date records to prove compliance to external bodies, such as government or industry agencies.

What are three types of audits?

The three main types of audits are internal, external and Internal Revenue Service (IRS) audits. Internal audits are conducted by businesses to find areas for improvement and efficiency fixes. External audits are typically conducted by accountants to analyze financial records and internal controls. IRS audits analyze a business’s tax records to verify the accuracy of its financial records and tax obligations/payments.

What are the four stages of supply chains?

Some analysts break the supply chain into four primary stages.

  1. Procurement of supplies from external vendors
  2. Planning and producing goods
  3. Logistics, such as storage and distribution of goods
  4. Direct delivery to customers, also known as “last-mile delivery”

What are four Cs in SCM?

The four Cs of supply chain management are coordination, communication, capacity and commitment.

  1. Coordination involves integrating and managing the separate processes that make up the supply chain, from procurement to final delivery.
  2. Communication helps keep supply chains flexible by establishing open lines of communication among links in the supply chain to help businesses quickly adapt to changing demand, supply chain disruptions and new best practices.
  3. Capacity describes a business’s ability to effectively use its time and resources to reduce waste and satisfy customer demand.
  4. Commitment is required from every link in the supply chain, from workers, to managers to the highest business leaders to continually improve operations and strengthen the supply chain.