The Impact of Factory Audits in China

Monday, March 16, 2009 7:59
Posted in category From the Factory Floor
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Good friend Pierig Vezin of Wethica has written the piece below as part of his regular newsletter series, and he has graciously allowed me to report it in full.

It is about a subject, the impact of factory audits on suppliers, that I think many people really need to take more time to understand – particularly buyers and consumers – as it is a core issue to the long term stability of supplier relationships.

The Impact of Factory Audits in China

The real impact on labor conditions from conducting social audits in factories is key to the nature of our work.

Even if the audit is to only gather information and not to act on improving factory practices, the audit request from a buyer itself should not be ignored.

It still has an impact.

First of all, audits themselves have an impact as they are a testament to the buyer’s priorities and involvement. An audited factory feels more pressured to exert effort in complying, or at the very least, appear that they are, and an agent company selects factories that meet the social criteria. This impact is actually a good social risk management tool for buyers but the effectiveness is limited.

With no specific targets, the aim is vague with reduced impact. A poor factory will not transform into a good one just from being audited. This kind of change requires strategic planning, stronger involvement from buyer and factory in implementing corrective action plans with specified goals. And even then, the results are greatly reliant on the buyer’s approach and degree of involvement.

Yet, audits are important too in this approach (apart of factory assessing). The audit is one of the few opportunities the factories have to show the buyer their commitment to social improvement. In turn, the factories gauge the buyer’s commitment by their degree of involvement. But if the audit is not thorough and meticulous, it can easily mislead both parties and thwart efforts to gain insight to the actual situation, causing improvements to only tackle perceived issues without actually penetrating the source. Most factories try to ostensibly match with the buyer’s requirements, mostly in efforts to appear compliant.

During post audit consulting, we often encounter situations where the factory is surprised, whether feigned or genuine, on problems that were not identified in an earlier audit, and thus, at a loss on how to proceed on improving. In such cases, the audit can, in contrast, act as an impediment on factory improvements.

Hence, it is important that a pragmatic and transparent approach is taken with factories to avoid these pitfalls and to ensure the purpose of the audit is fully implemented.

Short and to the point, Perig has another article that elaborates further on the issue of hidden books and agendas called Half Truths, and while considering the issues above, I suggest you read this article as well

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