The Commerce Department has urged one trading company to deliver the goods for several times, during which the trading company has provided many reasons for postponing the delivery time: the design had been changed; the environmental inspectors closed the upstream factories; they had holidays during Spring Festival, etc. As they have been hastened for several times, the sales representatives of the trading company had no alternatives but to provide a reason, or nonsense: the worker were on strike so that the goods could not be made. At this time, it is of no use threatening that they will be fined if they cannot offer goods. To solve the problem, the Commerce Department suggested that the supplier management department to examine it on the spot. The subtext is that the supplier management department was about to solve this problem. Of course, the audit was not conducted finally since the general manager considered that there is nothing for audit due to no production. The question is: what is the audit; what is the effect of audit; when will the audit take effect?
The Supplier Audit is not omnipotent.
I have seen many times that when the quality professionals or management staffs from oversea branches who newly joined the company and took over existing projects. One indispensable part of the agenda arranged for visiting Chinese suppliers is to audit the factories, probably including the system audit, process audit, or the combination of the two. Possibly, content concerned with safety or social responsibility will be included. Despite that the latter two may not appear on the original agenda, they can be added via a single sentence: “Don’t you think that it is also very important?” Consequently, different standards were adopted on multiple audits towards suppliers, resulting in different marks and levels for many times. Sometimes it shows that “it is conditionally approved or continue projects”, while sometimes it shows that “Max. 30 days for improvement”. The question listed is as long as four to five pages in case that the suppliers do not know how affluent his professional knowledge is, which makes suppliers quite confused. Indeed, this is like the city people who go to the countryside, as they regard everything as outdated and need improving.
The foreign-invested enterprises have set many procurement offices, procurement representatives and procurement centers within last ten years of development in China. In spite of different goals, considerable responsibility of Supplier Quality Management function is limited to Audit. For one thing, audit fees required by the third party seem to be too expensive— fees from initial audit and follow-up is separated clearly. For the other thing, audit is utilized to evaluate the qualification of factory, monitor and measure the improvement of factory, and determine the exit of factory. Finally, engineers in charge of managing suppliers are only able to audit.
As far as I am concerned, the audit is conductive to understand the situations clearly and identify problems to promote the correction and improvement. Nevertheless, some notes are necessary. (ISO defines audit as systematic, independent and documented process for obtaining audit evidence and evaluating it objectively to determine the extent to which the audit criteria are fulfilled)
1.审核不能解决业务问题Audit cannot solve business problems.
As cases above, despite that the factory said that, “the workers were on strike so that the product could not be made.”, the question is not clear enough. Why the workers were on strike? Whether the strike is organized or not? At least, it presents dangerous signals. At this time, the surest way for solution is transparent communication. It is likely that the business was problematic, but nobody other than the internal factory knows whether there is a problem or not, and it is merely about whether they are willing to confess to customers or not— Family shame should not be made public. The counterpart business, however, is the department for business allocated by purchasers. No matter which department decides to provide business to the other, it will be fine to invite them to handle it. In reality, the purchasers invite suppliers to conventions for self-criticism in first time. As a result, as for the suppliers, not only did they bring the general manager, but they also brought their cooperative partners— the general manager of manufacturing factories (Trading companies can only manage the manufacturing company via shares rather than substantial control). The reasons appear to be extinct: different development opinions owned by two parties give rise to divergence. The manufacturing companies think that as the recent procurement order reduces, the production handover becomes frequent, the efficiency decrease and the profits decline, they should require the customers to make more orders to ensure stable production. However, it is the responsibility of the trading company to ask customers to make more orders. From the perspective of trading companies, they are more likely to understand the customers’ feelings— if they cannot hand over cargos, how can they make sure that the customer is confident enough to make orders? This is the question of whether the chick or egg appear first. In the period of economy decline, the pure trading companies will be trapped in this trouble easily. Since the root of the reason has been discovered, the trading companies can develop solutions by their own— whoever started the trouble should end it. After all, getting an order is much more difficult than losing one. Here I am not going to discuss the solutions afterwards, yet simple in terms of audit, it cannot resolve the problem as the audit cannot solve the problem of business. Thus all the business problem can be resolved by inviting the third party, the most professional in this field, to examine the suppliers
2.审核的准则清晰The standard of audit should be clear
In the case above, it the audit should be conducted, which standard should be based on? Should we examine finance, production capacity or quality? Without standards and criteria, examination will be hard to proceed. Anything should be in specific items or names, otherwise it will be ambiguous. A distinct standard helps suppliers prepare in advance, otherwise, the result may be undeserved after audit. In the second case, it is not rare that foreign professions come to china to check. A traditional hardware factory supplies hardware products. As the volume of business of hardware products exerted relatively significant influence on the business, they are checked according to the standards of automotive industry, which is indeed inappropriate.
The criteria for audit also includes a clear conclusion afterwards. More often than not, the conclusion will be left for their own after examination, and only the items need improvement will be told to the suppliers, which results in the unilateral evaluation. If the evaluation is neutral while the report is objective, it is suggestive that the conclusion should be provided simultaneously. Although sometime it will hurt face, you can express in a euphemistic way. Moreover, if you are adept at communication, you can even make them appreciate you after criticizing them. Suppose that you go to date, if you chat with someone for a while but find him/her inappropriate later, it will be rude for leaving at once without any messages—at least, you have to tell the other one why they do not match.
3.有提前的约定Appointment should be in advance
Appointment in advance is like a guiding principle. Whatever the audit is, the rules should be communicated explicitly at the early stage in business —despite that the few rules are not be obeyed at last. Earlier I have introduced two sentence that “it is conditionally approved or continue projects”, or “Max. 30 days for improvement”. If they are implemented strictly without early advanced communication, the conflict will be caused. This is like the Master Kong Instant Noodle (Roasted Beef) that add more portions without increasing prices. If we do not follow it after audit, the audit will not be taken seriously next time—the rules are no more than a form.
No matter how the suppliers use audit— entry or exit, the rules should be established before the game. These rules can be communicated via various channels— supplier conference, supplier manual, supplier quality agreement, supplier project requirement, even the meeting minute at the early stage of project, etc. After all, you can take a horse to water but you cannot make it drink.
4.残疾人充其量只能是残疾人中的运动健将The disabled can only be the master of sports within the disabled.
Companies that lack systemic supplier selection process at the early stage always present such phenomenon that the project appears to be unfavorable from the beginning, either failed at submitting production of samples or repeated submission that gives rise to the serious delay of project. Finally, the samples become barely qualified for batch production with some deviations, but the quality fails during spot check in batches, or the delivery date is postponed, so that it is extremely difficult to ensure the quality as well as quantity. At this time, someone proposes checking the factory to urge the improvement. Definitely, check is appropriate, yet the effect of improvement seems to be unconspicuous — as they have got the business, who else will possess the strong motivation like work overtime at beginning to take your requirements into considerations? Just imagine, how many boys will send roses every day to their girlfriends after their girlfriends become wives?
Next, even suppliers are willing to improve in order to get more orders, improvement requires a huge amount of time and attention. This time the input may not generate abundant output if the method is improper or the focus is not grasped well— it is nothing but adding more forms with question of how long they can insist using these tools.
At this point, the intentions of improving suppliers via audit might be to turn a disabled person into a normal person. This is difficult indeed, as the disabled will at most become an athlete among the diabled.
Audit can identify problems, and the solutions for problems can be various, yet the audit is not almighty after all.
Great acknowledge given to Ms. ZiZhu Wang (Akiko) from Guangdong Unversity of Foreign Studies for translation.