In today’s globalised world of supply, the public and stakeholders are focusing not only on the products a company offers but also on how it conducts its business. Many demand that a company generates its profits ethically and honestly. So the onus is now on all companies to detail how they expect themselves and their supply chain partners to behave in their business dealings.
Companies must also be seen to be monitoring and ensuring that their suppliers are operating ethically. It has led to the creation of policy documents from firms concerning their Ethics or Code of Conduct expectations.
Many request third-party Inspection firms, such as Goodada, to conduct these Audits. Many folks need clarification on whether they require both audits or just one. So let’s delve into an in-depth comparison of these two types of Audits.
If you want more information, please visit Goodada’s Supplier Code of Conduct page. You can also find my contact details at the bottom of this article.
Understanding a Supplier Code of Conduct Audit
So, a Supplier Code of Conduct Audit focuses on a supplier’s adherence to a defined Code of Conduct. Their customers often issue this code of conduct. A Supplier Code of Conduct audit ensures that suppliers meet the behavioural expectations and ethical requirements set by their customers. Usually, the customer requests an independent inspector to visit the Supplier and conduct a Code of Conduct Audit. It is part of the Supplier’s customers’ responsibility to demonstrate that it is monitoring the Supplier’s adherence to the code. These audits help the customer to verify the integrity and ethical impact of its supply chain.
So, what is a Supplier Ethical Audit
A Supplier Ethical Audit is a detailed review of a supplier’s ethical business practices and procedures. This Audit reviews all aspects of a supplier’s operations, such as employee working conditions, environmental impact, and data privacy.
It is generally left to the Supplier that is audited to advise on what they determine as ethical practice. Usually, many will use the minimum legal requirements of their jurisdictions as the baseline standard.
What is the Difference Between a Supplier Code of Conduct Audit and an Ethical Audit?
While both audits aim to maintain ethical trading standards within a supply chain, there exist critical differences between them. So, a Supplier Ethical Audit generally assesses a supplier’s ethical business practices. The company’s customers should not expect any specific requirements from the company. The Audit evaluates the Supplier’s commitment to complying with local labour and environmental laws and regulations.
A Supplier Code of Conduct Audit is driven by the firm requesting it. In this instance, the firm will have already set out its expectations and requirements of how it expects suppliers within its supply chain to operate. These expectations are set out via a Code of Conduct Policy document. Most firms request a Supplier to sign up and commit to adhering to its Code of Conduct Policy. However, the onus now rests with the firm to monitor that a Supplier is adhering to the guidelines of the Code of Conduct. This monitoring is done via the Supplier Code of Conduct Audit. Firms hire expert third-party inspection firms such as Goodada to conduct these audits. According to best practice, companies should audit the suppliers in their supply chain every 18-24 months.
So, why Supplier Code of Conduct and Ethical Audits are Important
Supplier Code of Conduct and Ethical Audits are not a legal requirement. However, these audits are a critical tool for a firm to monitor and maintain ethical credibility and trust within its supply chain.
The purpose of a Supplier Code of Conduct Audit is to consistently reinforce a firm’s business trading and ethical expectations across its supply chain. Discovering a supplier behaving in an unfair or unethical manner can reduce the impact on a company’s reputation and brand.
A Supplier Ethical Audit is a general overview assessment of a Suppliers commitment to adhere to local labour and environmental laws.
How to choose between a Supplier Code of Conduct or a Supplier Ethical Audit?
The purpose of a Supplier Code of Conduct or an Ethical Audit is to ensure that the suppliers in a firm’s supply chain are trading and behaving fairly and ethically. So, when people ask me which is the best Audit to choose, I advise them to proceed with a Supplier Code of Conduct Audit.
The firms’ customer’s expectations help define the criteria of behaviour and ethics. It will be the customers who will judge if a firm’s trading behaviour is of an acceptable manner. Consequently, it is prudent for a firm to set out its own Code of Conduct for the suppliers in its supply chain. This Code of Conduct will reflect the expectations of the customers and stakeholders of that firm. It can also solidify a firm’s reputation with its customer base and help distinguish it from its competitors.
So, it is in a firm’s best interest to monitor that their suppliers adhere to the code of conduct policy. It reduces the chances of negative issues arising and maintains consistency across the supply chain.
An Ethical Audit is a more general audit. It is weaker as it leans towards laws and regulations where a supplier is located. These regulations may not meet the expectations of a firm’s customers. Additionally, it can also create an imbalance in an international supply chain as there can be a difference in supplier standards due to different laws and regulations of each jurisdiction where the Supplier is located in.
So a Conclusion
Understanding the differences between Supplier Code of Conduct Audits and Supplier Ethical Audits is vital in today’s modern supply chain management. The overall objective of these audits is to maintain a company’s ethical standing with its customers, stakeholders and the public. Firms should undertake a Supplier Code of Conduct Audit to maintain consistency in their supply chain and ensure that they actively check adherence to their values.
To learn more, please visit Goodada’s Supplier Code of Conduct page and below are my contact details. Goodada offers a broad range of inspection services across the world.
Therefore, for more information, contact:
Contact Person: Aidan Conaty
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Phone:(Europe/ Rest of the World) +353 1 885 3919 ; (UK) +44.020.3287.2990 ; (North America) +1.518.290.6604