Step Three: Monitoring Supplier Performance

Step Three: Monitoring Supplier Performance

Standards such as SA 8000 or ISO 14001 will provide the requirements for companies wishing to assess their suppliers, and usually also provide (to a limited extent) coaching and consultancy suggestions. When combined with process standards such as AA 1000, the complete package should provide any company with enough process and performance guidance ( critics would argue too much) to create a strong supplier monitoring process. There has been a good deal of experience and labor put into these standards, and there is little point in a company creating supplier monitoring strategies ” that is, reinventing the wheel ” independently.

Typically, monitoring procedures will involve a combination of surveys, desk-based research assessments, site visits, and full-blown code inspections. Obviously, in a company with many hundreds of suppliers, prioritizing and ranking suppliers and then choosing the most effective monitoring approach becomes an important exercise. In a recent survey of monitoring techniques used by member companies in the Ethical Trading Initiative, roughly one-third of monitoring was desk-based, using survey responses, public domain information, and the Internet. A third of monitoring activities involved site visits, and a third involved more formal whole code inspection visits (17 percent) and full external audits (10 percent). [11 ]

The Integrated Social and Environmental approach (ISE), for example, was developed by the Natural Resource and Ethical Trade Program (NRET), and draws on the experience of extensive agricultural auditing that has taken place in Africa. The approach combines many of the best practices found in the Ethical Trading Initiative, SA 8000, and EMAS guidelines and standards.

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Characteristics of the ISE Audit Approach

The following text is directly quoted with permission, from Integrated Social and Environmental Auditing. See source note below.

Involves Consultation with All Stakeholders. All stakeholders are consulted, i.e. managers, smallholders and workers. It is particularly important to consult with different types of workers, since they may face differing conditions and treatment by managers and supervisors.

Encourages Bridge-Building. One of the indirect benefits of such consultation is that you get better communication between management and workers. Through the exit interview and the audit report, the audit team feeds back the concerns and priorities of the workforce to the management. In this way, the management can increase their understanding of worker concerns and priorities, and can also find out which farm policies are followed, misunderstood or ignored by workers. Improved communication can by itself help to improve worker morale .

Integrated Social and Environmental Auditing ” A Team Approach. Social and technical (i.e. environmental and food safety) aspects of the code are audited together. Within the audit team, different members may have specific expertise in the social or technical aspects. However, each audit activity is a team activity involving both the social and technical experts . The advantage of . . . combining the two aspects is that many indicators and verifiers measure a combination of social, environmental, and/or food safety criteria. For example, assessing the knowledge of the pesticide spraying team regarding selection and safe application of pesticides will tell you something about worker health and safety, as well as environmental and food safety risks, at one and the same time. Integrated auditing therefore avoids unnecessary duplication of effort, and therefore saves money.

Triangulation ” Reliance on Nonwritten Information Sources (Verifiers). ISE auditing relies just as much on non-written verifiers (i.e. information gathered from interviewing people, or from direct observation) as it does on written records. This characteristic is important because, in Africa, most small and medium- sized farms keep very few written records. While these farmers would undoubtedly benefit from better record-keeping , the audit approach used in such circumstances also needs to be effective despite the current paucity of written records. Moreover, the audit team responsible for piloting the audit protocol found that, even where written records do exist, information revealed through interviews and direct observation often turn out to be more accurate than the written records. The combined use of written, verbal and visual verifiers is also important because it provides a means of cross-checking ” or triangulation ” of data collected.

Flexible and Informal Nature of Data Collection. Flexible and informal data collection methods ” as opposed to formal questionnaires ” are used because it helps to relax both workers and managers. This encourages them to talk freely and openly about the different aspects of the code, and makes it more likely for auditors to identify unexpected problems. Both social and environmental issues are often complex, and linked to each other in ways that are difficult for an outsider to see. Open , flexible interviews and discussions give interviewees a greater opportunity to highlight complexities and linkages (see examples in section below on interview techniques).

Use of Local Auditors. A number of characteristics of the auditing approach ” in particular the reliance on non-written verifiers ” demands the use of local, rather than foreign, auditors. It is essential that the audit team can speak the same language(s) as the workers (and farmers), and that they understand local farming systems and social conditions. Moreover, it is important that auditors are resident in the country. Otherwise, it will be difficult to maintain frequency and continuity of auditing, and to ensure that capacity-building aspects of the auditing approach are upheld (see below).

Frequent Visits. The ISE auditing approach ” unlike many other auditing approaches ” is based on a schedule of short, frequent visits, rather than intensive annual audits. Frequent visits help to build trust between the farmer, workers and the audit team, which in turn increases the chance of getting reliable information. Frequent visits also help to keep the code alive . Regular discussion about the code means that the issues will stay in the minds of farmers and workers, so that they are more likely to take it seriously and do more work on it. Shorter visits are also less disruptive to the operations of export farms. There will not be time to audit against all aspects of the code within one visit. A list of non-audited areas is made at the end of the audit, which serve as a focus for the next audit visit, perhaps three months down the line.

Continuity of Auditors. Experience of researching labour and other social issues on commercial farms shows that reliable information can only be ensured if trust is built up between the workers/farmer and the researcher (or auditor ) through repeated visits. It is therefore important to ensure that there is continuity of auditors i.e. the same auditors go back to a particular farm over a period of time. However, the benefits of continuity need to be balanced against the increased risk of favouritism and/or bribery . . .

Advise , Support and Inspect ” A Capacity-building Approach to Auditing. In the ISE auditing approach, the auditor is not just an inspector . He/she also plays a supportive and advisory role to the farmer, in particular in the early stages of setting up a code and/or when the farmer in question is new to the code. Recent experience of implementing codes of practice in Africa shows that many farmers are willing to implement code requirements, but don t know how to go about it. That is, they need basic advice, training and encouragement on understanding different elements of the code and how to translate them into practice. The advantage of integrating the advisory and inspection roles is that farmers come to see auditors as a friend or adviser rather than a spy . With this type of relationship, auditors are much more likely to get a reliable and complete picture of the social and environmental performance of a farm.

Source: Integrated Social and Environmental Auditing, NRET Theme Papers on Codes of Practice in the Fresh Produce Sector, Number 7 at

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[11 ] The Ethical Trading Initiative s 2000 “2001 Annual Report at publications /ann-rep/2000_en/page04.shtml.