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Associations Attempt to Address Suppliers’ “Audit Fatigue”

April 21, 2008

When social compliance standards vary from organisation to organisation, many suppliers can experience what is known as “audit fatigue”.  As the expression suggests, it is common for suppliers to have several social compliance audits a year.  Furthermore, different auditing standards may require different corrective action plans (CAPs).  As a result, factory owners spend time and money endeavouring to meet all manner of standards, which can sap production resources and drive up costs.

A recent article in the Vancouver Sun on VANOC’s Buy Smart program illustrates the issue of audit fatigue and how it can impact the flow of business.  The article cites that one licensee factory refused to be audited as it had already endured five time-consuming audits previously and could not afford any further interruptions.  Obviously this factory does not meet VANOC’s minimum standards but it may in fact be compliant with The Code.

Two issues emerge as a result of this scenario.  One, it speaks to the lack of consistent social compliance auditing standards.  Two, it demonstrates that auditing can be duplicative, and therefore inefficient.  It is not uncommon for three or four competitive brands to have their products made in the same location and thus, having three or four individual audits seems unnecessary and wasteful.

Creating consistent auditing standards is not a new issue and so initiatives exist, already.  As an example, the Sweat Free Consortium hopes to bring both municipal and State governments in the U.S. under the same set of standards.  Groups such as the Ethical Trading Initiative (ETI) or the Fair Labour Association (FLA) also advocate for consistency in Code of Conduct standards.  This issue will certainly receive more attention as more organisations incorporate social compliance programs and we’ll likely be writing about it more so stay tuned!

For the latter issue of duplicating efforts, companies such as Fair Factories Clearing House (FFC) and the Supplier Ethical Data Exchange (SEDEX) provide opportunities for companies to eliminate these inefficiencies through sharing information.  Using custom web-based platforms, member firms are able to share information about workplace conditions in manufacturing facilities around the world on an optional basis.  FFC and SEDEX differ from ETI and FLA in that they don’t endorse one Code nor do they assign pass or failing grade to factories.  These systems simply allow aggregate audit information to be shared.  The aggregation of data addresses those issues related to antitrust or risks to a supplier’s competitive advantage.

If social compliance auditing is becoming a big part of your operation, using systems such as the FFC or SEDEX may not only allow you to store and organise your audits on a secure database, but it also could bring cost savings and increased efficiency to your program.

Here is a recent press release from FFC announcing Levi Strauss & Co., Nike Inc., Nordstrom, and Abercrombie & Fitch as its first “sharing members” for its new platform that was launched April 2, 2008.

http://www.fairfactories.org/press/Sharing%20Platform%20I%20launch%20press%20release.doc

Article in Vancouver Sun can be accessed at:

http://www.canada.com/vancouversun/news/story.html?id=b325f36b-97aa-4aec-8fea-3477d8a32cb9&k=68387

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