7 Steps to Adopting an Effective Risk-Based Audit Strategy

Take 7 steps to help grow and secure your brand and reputation. As supply chains increase in complexity, these seven steps will ensure the design and implementation of an effective end-to-end risk-based audit strategy.

The industry is changing rapidly. The need for faster time-to-market for innovations and the demand for additional capability to meet evolving consumer expectations triggers increasing complexity. Deploying your audit activities wisely across the supply chain is of the upmost importance to protect your business in a sustainable way. Targeting your audit efforts and resources at the right place and the right time to uncover and then address the main risks, is key.

Why Does Your Audit Strategy Fail to Prevent Serious Issues?

The resources available for your audit program along the supply chain are finite, while your organisation deals with constant changes. There are new products, new lines, new ingredients and packaging materials, new suppliers, new co-manufacturers, new ways of working, new risks, and much more. Sound familiar?

You might also ask yourself questions—and you are not alone in this: Why are we still having issues and fighting fires, even with all our audits? How could our audit programme prevent these issues? Are we getting enough value from our audits? What synergies are we missing in our audit strategy, and is it risk-based? Does it really drive continuous improvement, and is it ready to meet future business needs?

In a context of constant change, how do you balance your audit efforts between suppliers, internal manufacturing plants, co-manufacturers, transportation service providers, storage operators, and other actors playing an important role in your supply chain? Which areas shall you consider with the highest priority and why? How often should you revise your audit strategy and plans?

Companies are increasingly facing this problem. Failing to adapt to the changing business landscape can bring lasting damage—especially when entering new markets, new product categories, and new business territories.

7 Steps to Design and Implement Your Risk-Based Audit Strategy

Considering the following steps is by experience key to a robust, effective, and sustainable risk-based audit strategy:

  1. Map your entire end-to-end supply chain.
  2. Leverage all available data, risk maturity levels (see step 6) and science to identify risks across the entire supply chain. Research and anticipate future potential risks.
  3. Consider previous issues within your supply chain and the industry overall. Get an understanding of the root causes of these issues.
  4. Design a supplier audit program that focuses on the priority / high risk ingredients and packaging materials. Design a manufacturing audit program that focuses on the priority / high risk products and processes. Apply a similar risk-based approach to all the transportation and storage steps of your supply chain. Perform the assessments in consideration of all finished product types and consider the external certification status as one of the inputs amongst others.
  5. Use the outputs of steps 1 to 4 to design and update your audit programmes and protocols on a regular basis: establish the areas of the supply chain to be audited, the scope of your audits, their frequency, the audit trails, and audit topics, on the audit agenda.
  6. Ensure your auditors are and remain competent, independent, and that their product / process knowledge is kept up-to-date. Use the audit results to establish the risk maturity levels and to drive continuous improvement of the supply chain.
  7. Go back to step 1 to revise your audit strategy and programs on a regular basis and when needed. Make the process dynamic and agile.

Designing and implementing a holistic, effective risk-based audit strategy requires focus, experience, expertise, and anticipation. Ensuring all 7 steps are properly designed and implemented is necessary to achieve the desired results.

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