Bringing supplier audits on track
A tremendous opportunity exists for the Rail sector to realign and enhance the auditing processes for its suppliers – an opportunity that will deliver greater value to suppliers and buyers alike. By Annette Gevaert.
For many years the Rail industry has audited its suppliers in accordance to a supplier’s potential for risk. And, of course, this is an essential process for every buyer and ensures that the important safety requirements are met. However, the way the industry approaches supplier audits is fragmented and in need of change. Firstly, there is a significant level of confusion in the industry over the boundaries between the three key tiers of auditing that exist.
On one level, there is the qualification of a supplier to certified standards, such as the ISO standards for health & safety, quality and environment. On another tier, there are technical and buyer/contract specific audits, such as RISAS, and on-track plant that relate to specific risks. But in the middle, there is a critical tier which concerns the pre-qualification and auditing of a supplier’s management processes and systems relating to the way a supplier deals with health & safety, quality and other important policies within the organisation. This audit is offered through the Link-up scheme run by Achilles.
Unfortunately, a number of industry members wrongly assume that the Link-up audit is a technical one, evaluating the technical and contract specific capabilities of an organisation. This is just one aspect of the rail industry’s auditing structure that needs to be made clearer. There are further areas that can be improved and upgraded to provide greater value.
Link-up, the industry’s supplier qualification scheme, is a collaborative community of 3500 suppliers of which some 1300 undergo a pre-qualification audit on an annual basis. The assessments are undertaken by a team of highly skilled and fully qualified auditors who are conducting the in-depth analysis of management processes and systems at an organisational level. At present, this is an exercise which determines whether a supplier is compliant to the defined minimum standards or not, hence, if a supplier has passed or failed the audit. There is no grading of a supplier in terms of its maturity and approach to its management processes – offering little visibility to buyers of a supplier’s continuous improvement efforts and long-term performance in this regard.
For many suppliers this is doing them a disservice, as top performing companies are seen in a similar light to those merely attaining a pass. What is more, the auditing process, at present, offers little advice, guidance or feedback to suppliers on how that organisation might improve its processes.
Clearly, there is a great opportunity to change for the better and this is exactly what Link-up is in the process of doing. Under the new Steering Group for Link-up, a Working Group on auditing has been established to find a more ‘value adding’ means of conducting supplier audits. Discussions are underway to put in place a ‘star’ system that will rate suppliers on the maturity of their management systems in regard to supplier risk. In addition, suppliers will receive valuable feedback on ways of improving their systems. This will promote ‘best practice’ and raise standards across the industry. After all, if you only ask for minimum requirements, what is the incentive to go the extra mile?
These proposals are similar in many respects to auditing schemes run by Achilles in the Utilities and Construction industries, where they have been successfully proven to deliver significant benefits for both suppliers and buyers. If the proposals are accepted Link-up will follow suit, delivering a more graded approach to auditing and, in the process, will offer more value added advice in return.
It is also proposed that Link-up will offer a central repository for information relating to the various audit schemes. Users of Link-up will be able to access the results of supplier audits undertaken by other schemes making compliance far more visible to buyers.
Ultimately, the aim is to further align the pre-qualification audit programmes across the industry and to closer integrate the requirements of London Underground/TfL. This would bring huge advantages for many suppliers, reducing the burden of duplicate audits, taking out complexity and reducing costs for the industry.
Link-up has embarked on a process of change that will deliver far greater levels of efficiency to the rail industry, making procurement and its vital auditing methods easier to engage with, more responsive and, above all else, more integrated, visible and intelligible.
Annette Gevaert is Director Rail and Transport at Achilles. www.achilles.com
About Achilles: Achilles helps companies to improve their supplier information management. Our services collect and validate supplier information throughout the life of the business relationship so that buyers are better informed and can make better procurement decisions. Achilles has offices in 23 locations around the world and actively support over 750 of the world’s largest buying organisations to manage their supplier data. With a global view of the supplier base, buyers have access to accurate and up-to-date information on their suppliers, they can streamline their supplier engagement, standardise their policies and reduce the risk of non-compliance in areas such as health and safety, quality and environment; and confidently assess the total impact of their procurement decisions.