After a supplier signs the agreement with the organization on the minimum requirements, the organization’s compliance teams carry out their first social audit of the manufacturer’s facilities. This audit, conducted by both independent external auditors and in-house CSR teams, includes surprise visits to workplaces, interviews with factory managers, employees, trade union representatives and health and safety representatives, document review (management systems, payroll, hours worked, output, documentation on workers and permits) and assessments of waste management, emissions and resource use.
Unauthorized outsourcing deals are forbidden. In the event that a supplier outsources some of its production to other factories, the subcontracted facilities must meet the same organizational requirements and submit to obligatory audits. For the purpose of detecting potential unauthorized subcontract work, the in-house CSR teams utilize a range of tools which help them to assess and compare each supplier’s production capacity.
Every supplier is assigned a score on its degree of compliance with each of the headings in the Code of Conduct analyzed during the social audit. The organization sorts the vendors into four categories, viz. Supplier A, who complies with the Code of Conduct, Supplier B, in breach of some minor aspect of the Code of Conduct, Supplier C, in breach of some non-exclusionary aspect of the Code of Conduct, and Supplier D, who fails to comply with several Code of Conduct requirements.
Application of corrective action plans is also necessary. An organization that survives on the philosophy of growing and improving alongside its suppliers, consequently its social audits are always complemented by proposals for resolving any areas of non-compliance the audits uncover. The in-house CSR teams actively support suppliers interested in continuing to work for the organization by designing corrective action plans as a means of resolving possible compliance issues. These plans are always developed with the participation of all involved parties.
After customized corrective action plans are drawn up for the supplier, monitoring audits are scheduled. These audits can include surprise visits and are intended to verify, in accordance with a series of deadlines, that the vendor has begun the agreed-upon improvements. Depending upon the supplier’s rating in the social audit, monitoring audits are carried out on different schedules, as
Supplier A – maximum period of 24 months
Supplier B – maximum period of 18 months
Supplier C – maximum period of 12 months
Supplier D – maximum period of 6 months
