Duration Supply Chain Audit Methodology Essay

Length: 11 pages Sources: 1+ Subject: Business Type: Essay Paper: #77842343 Related Topics: Audit, Auditing, Internal Auditing, Supply Chain
Excerpt from Essay :

As noted at the conclusion, these metrics and measures would be qualitatively analyzed by the consultant and quantitative values assigned for each of the questions which would correspond to the five general dimensions under consideration in the short-duration supply chain audit; high attribute examples would be assigned a "1," in this analysis, and a low-attribute example would receive a "7."

Table 1

Short-Duration Supply Chain Audit Questions and Corresponding Performance Indicators


High Attribute Example = 1

Low Attribute Example = 7

Does formal product/service profiling and rationalization occur routinely to minimize the risk of obsolete inventory and other costs? What is the reservation capacity?

There are extensive programs in place to minimize the risk of obsolete inventory and other costs.

There are no programs in place to minimize the risk of obsolete inventory and other costs.

How well integrated are the company customer facing processes to the enterprise information systems?

Real-time integration is achieved, not only within the organization, but also across our value chain partners

There is little integration

Does the system interface with other company functions and suppliers?



Are logistics parameters (leadtimes, inventory carrying costs, etc.) taken into account when leads are negotiated with clients ?

Impacts of negotiated sales conditions are clearly understood and taken into account during the negotiation phases.


Did the company tailor the products and services to different customers?

The company offers unique solutions to individual customers

The company offers the same range of products to all customers

Through which channels does the company offer products and services to the customers?

The company utilizes multiple channels, depending on the needs of the individual customer and their value to the organization

Primarily through one or two key channels (e.g. branch network and a field sales team)

Does the company monitor the external environment?

The company has a formal proactive process for gathering and disseminating information about the external environment and uses this information in the development of sales and marketing strategies.

The company does not proactively gather information about the external environment (e.g., industry trends and benchmarks, economic factors, competitors).

Is there a current documented strategy & business plan including supply chain targets and goals?

Strategies are aligned with the business plan. Goals and targets are reviewed methodically.

No strategies are developed.

How well are customer service's goals aligned with manufacturing and production?

Very much so.

Not at all.

How well are customer service's goals aligned with inventory management and distribution?

Very much so.

Not at all.

To what extent do clients participate in the demand forecasting process?

Client information is integrated into the sales and order entry systems for both forecasts and demand.

Client information is un-related to the internal demand information.

Is forecasting process in place and documented and do forecasts relate to meaningful product or service families, groups or items from an operations perspective?

Forecasting is developed and aggregated to appropriate levels.

Forecasting is segmented by product or operational site or location.

What types of forecasting analysis does the company use for medium and short-term forecasts?

For short-term forecasting, time series analysis modified by any special events is used. For tactical-range forecasting, the analysis is an equal blend of all the three types of analysis (time series, regression, and qualitative).

We use the same types of analysis for all requirements.

What is the organizational approach to the demand forecasting process?

Forecasting is a collaborative process. Marketing feeds information on market events. Finance may give an indication to the general direction of the economy. Purchase may indicate competitor activity. All these pieces of information are shared simultaneously (not sequentially) through online exchange of information. Final forecast is a consensus forecast.

An individual from one of the functional areas develops a forecast. Sometimes, each individual functional area makes its adjustments.

Do sales forecasts permit resource and capacity planning beyond the cumulative product / service lead-times?

Planning can integrate products and services times across products and groups.

Planning is at the item level.

How extensive is the


Other issues to be considered in the short-duration supply chain audit of the manufacturing company in question would involve analysis of various measures and metrics that are directly tied to the five general dimensions being developed by the short-duration supply chain audit. These aforementioned five general dimensions and their corresponding questions are presented in Table 2 below.

Table 2

Five General Dimensions of Supply Chain Management


Questions're Measures & Metrics

Does the company have a clear strategy in place for the entire supply chain that is linked to market opportunities and focused on customer service needs?

1. Is the supply chain strategy codified?

2. Is the supply chain strategy known to all stakeholders, including suppliers and buyers?

3. How are customer service needs identified?

4. How are customer service needs measured?

5. Does the company use customer relationship management tools and if so, what kind?

6. How is this information used, who has access to it, and how frequently is it updated and disseminated throughout the organization?

Does the company have an integrated organization structure in place that allows the supply chain to operate as a single synchronized entity?

1. Does the company solicit feedback from its employees, suppliers and buyers concerning proposed changes to its supply chain?

2. Does the company use cross-functional teams to review proposed changes to the supply chain management process to ensure that changes in one area do not result in unexpected changes in others?

3. Does the company use an intranet or Web-based communications technique that allows access by the company's employees, buyers and/or customers?

Does the company continuously seek to implement improved supply chain management processes?

1. Does the company use a specific process improvement strategy? If so, which one? For example, many organizations already have systems in place that are intended to control the purchasing of products and the verification of purchased products in a way in which they consider satisfies the requirements of Clause 7.4 of ISO 9001 that were installed when the company refined their supply chain management processes; therefore, auditors can confirm compliance by ensuring that an approved supplier list is up-to-date, that orders have been placed only with approved suppliers and activities necessary for ensuring that meeting specified purchase requirements have been carried out. In many instances, however, that may not be sufficient to ensure that purchased products simply meet original specifications in all respects. In these types of instances, it would likely be preferable to review the wider processes for the supply chain (Auditing the procurement and supply chain processes, 2009).

2. What measures are used to measure the effectiveness of quality improvement initiatives?

3. Who is responsible for tracking this information and analyzing it?

4. How is this information used, who has access to it, and how frequently is it updated and disseminated throughout the organization?

Does the company have access to and use reliable information and integrated technology to support effective supply chain planning, execution and decision-making?

Based on responses to questions concerning the adequacy, effectiveness and the frequency of the dissemination of supply chain-related information throughout the organization as well as with its buyers and suppliers.

Does the company enjoy effective performance management of all of its supply chain operations to achieve top-line revenue growth, optimum asset utilization and bottom-line profitability?

This dimension will be a qualitatively assigned quantitative value that is based on the analyses of the foregoing measures and metrics.

The final report that emerged from the short-duration supply chain audit would incorporate a qualitative analysis of the major findings from the three general areas reviewed above, together with a discussion of the findings of the various questionnaire entries completed during the audit. The latter element would be supplemented by a graphic presentation of the quantitative variables involved such as the rank value assigned to each of the questions presented in Table 1 and the five general dimensions described above together with a list of suggested areas for improvement and further auditing services based on identified strengths and weaknesses in the manufacturing company's supply chain management function.


Auditing the procurement and supply chain processes. (2009, June 5). International

Organization for Standardization (ISO) 9001 Auditing Practices Group and International

Accreditation Forum Guidance. [Online]. Available: http://isotc.iso.org/.

Auditing the supply chain (2009). Logistics Learning. [Online]. Available: www.logistics learningalliance.com.

Boyson, S., Harrington, L.H. & Corsi, T.M. (2004). In real time: Managing the new supply chain. Westport, CT: Praeger.

Elliott, D., Swartz, E.…

Sources Used in Documents:


Auditing the procurement and supply chain processes. (2009, June 5). International

Organization for Standardization (ISO) 9001 Auditing Practices Group and International

Accreditation Forum Guidance. [Online]. Available: http://isotc.iso.org/.

Auditing the supply chain (2009). Logistics Learning. [Online]. Available: www.logistics learningalliance.com.
Available: http://www.scp-uk.co.uk/pdf/SupplyChainAudit.pdf.
http://www.ilo.org/public/english/protection/safework/li_suppliers/download / occupational/questionnaire_national.doc.
Supply chain phase questionnaire. (2009). KnowledgeLeader. [Online]. Available: http://www.

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