Supplier auditing on the IMPA Agenda

IMPA COO Stephen Alexander explores the latest thinking within IMPA on the issue of supplier audits and calls for members inputeducation-training-impa

Supplier auditing has long been an area of interest to me. Over the years, I’ve seen how some purchasing managers like to visit their suppliers and explore the relationship and others don’t; how some have a detailed system for audits and others simply don’t have time. Alongside this, I’ve been approached on several occasions by suppliers themselves suggesting that IMPA should run some kind of supplier accredited system and award bronze, silver, and gold standards.

The whole area seems to lack any form of a standard, and this is always where I believe IMPA can provide a service. Imagine if we could operate an IMPA supplier audit system that meant purchasers could have access to audits completed to an industry agreed template and format and then avoid the necessity of auditing for themselves? I’ve run this idea past a few purchasers, some of whom love the idea. Jesper Larsen, one of IMPA’s council members and Head of Procurement at Ultraship, said to me that perhaps the way forward (at least to begin with) could be to let customers do the audits themselves and then have the result and date of the audit uploaded by IMPA in a common spreadsheet. IMPA members and ship owners/managers could then benefit from not having to do similar audits with the same supplier. Suppliers would probably be willing to pay for such coordination.

This is the way it works with Incentra in Norway. Incentra are a buying group representing about 40 Norwegian ship owners. I remember our previous Chairman, Jan R. Johannessen saying whenever his department was audited and asked about supplier checks and audits he would simply point to his Incentra membership.

So the idea of running this out on a global scale seems to warrant further exploration? As it happens, this is also what IMPA has done with the IMPA ACT programme for so-called social audits. Over the course of the last six months, IMPA has developed an audit-style process with guideline documentation for purchasers to undertake the final step in the IMPA ACT process, which is a form of auditing. The great benefit here being that one audit takes place with each supplier and all buyers share in the confidence that the supplier has reached IMPA ACT preferred supplier status. There will be more about this in future issues, but in the meantime we are publishing in every issue those suppliers that have reached this prestigious ‘preferred’ supplier status.

Moving back to the wider issue of quality audits, the difficulty lies in the fact that any management system is linked directly to the company and its own operating procedures. Most management systems, ISO based or linked to ISM, do include the almost pre-requisite thinking on a requirement for carrying out supplier audits, but one senior purchasing manager recently told me this is something he is aware of and also aware it isn’t being done but there just isn’t time! Needless to say, he was one of those in favour of IMPA playing a part here. On the other hand there is a different approach, which involves writing an alternative system for supplier auditing. Jesper Larsen recently explained to me how in favour of supplier audits he undertakes supplier evaluations. These are entirely based on supplier performance and involve running checks and an analysis of said performance from the office, so no site visits are required. Certainly there is consensus that supplier audits generally take place when there is a problem in the relationship and perhaps tactically the audit serves as a way of getting the relationship back on track. I’ve heard that a few times too.

The overall issue here though is that although each management system involves, to a certain extent, tailor-making the requirement for each company, I’d still like to believe that an industry-standard audit procedure, undertaken by IMPA and available for all members, would make sense. If a working group was put together to formulate the template and guidelines as well as ensure quality in the approach then perhaps this could provide tremendous value to members. The other issue is that suppliers themselves have audit departments, which surely are spending the time repeating very similar exercises with different clients? Surely it would be beneficial for the supplier too to have one audit undertaken by IMPA and then this could be shared to all clients? Is it a step too radical in thinking to ask the suppliers to pay for that single audit? The cost saving from them would be significant in that they would only have a single audit, once a year? I know some of the larger suppliers have suggested this so it’s not too far out there!

Perhaps I’m being naïve, so I’m using this article to ask if anyone agrees or would even like to be a part of such a working group to explore this further? I’d love to hear from members on this idea so please drop me a line if you think it warrants it at salexander@impa.net.

Meanwhile, IMPA already runs a very good supplier auditing course together with Lloyd’s Register. For anyone interested in the subject this is a great place to start. I attended this programme last year, it runs over two days before IMPA London, thereby allowing people to travel for both events. It focuses on the core purpose of supply audits, which is to ensure continuous improvement, and this invariably is linked to assessing performance against the company’s management system. An audit checklist is used in this process and once again there is a need for a selection of audit checklists for different supplier types that can be used in the audit process. Something else for IMPA to consider perhaps and something that as a united membership we could prepare for the benefit of members and the industry.

Overall the subject of standards and process will play an increasing part in the procurement function like many other departments as the search for increased efficiency remains relentless. I’d love to hear from anyone interested in contributing to this debate.

For full information including costs relating to the course and to register your interest email training@impa.net

This article is from Marine Trader, IMPA’s leading publication for marine purchasing and supply.