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Tuesday, 29 October 2013

Unannounced Audits and the Issue of Distrust

 "Catching Them in the Act"

What is the difference or relationship between being audit-ready and being recall-proof? Is the idea of unannounced audits taking us back to the era of “Catching the Deviants (or the ambush mentality)” as presented in the C-Trend Post?
Productive cooperation is greatly hindered where the spirit of distrust is propagated by distrust-driven mechanisms such as unannounced audits. 

Customers and regulators distrust suppliers because some suppliers (and too many suppliers in that category of "some") behave in fraudulent ways. Outright or systemic fraud is rampant. In such an environment, audits (announced or unannounced) remain within the "catch them/catch me if you can" sphere. Unannounced audits are designed to "catch them in the act".

Another aspect of distrust that I see has to do with the knowledge base for managing the systems. Customers and regulators do not have complete confidence (they distrust) that operators have enough knowledge to produce safe products of acceptable quality. Announced and unannounced audits are intended but badly designed and implemented to "educate/train operators/suppliers".

Except in some situations where suppliers are also customers or vice versa, suppliers do not generally distrust customers. Hence suppliers do not usually audit their customers. What often happens, that comes close but different from suppliers distrusting customers, is that customers sometimes make unrealistic demands that may cause the suppliers to wonder about (or distrust) the knowledge/intelligence of the customers. In such instances, brave suppliers may question the wisdom of what is demanded. Many suppliers, however, simply do as they are told because “the customer is king and must not be challenged” even when there is reason to wonder about (or distrust) the knowledge of the customers in making the demands.

The Elitism, Impracticality, Global-Scope Ineffectiveness and Inefficiency of Unannounced Audits:
I find it important to add this point: Unannounced audits are elitist. They are also impractical where they should be most needed given the usual argument in support of such audits. For example, the feasibility of unannounced audits come to mind when considering small operations that are unable to afford the resources required (funds, personnel and time). That's not all. There is also the feasibility consideration for remote locations in some underdeveloped countries that produce some of the spices, flavoring, thickening, coloring ingredients, etc. How feasible are unannounced audits in such locations? Irrespective of rationalizations about why these producers may be exempt, current assessment systems that are deemed to be necessary, never mind unannounced audits, become clearly impractical and elitist. As obviously as can be seen from these arguments, any system that cannot be applied globally to equal degrees is ineffective in safeguarding the global food supply. Unannounced audits fall into this category.

Another argument that is effectively nullified by the weakest chain link reasoning is that "we can only do what we can, where we can". In other words, we can only strengthen the chain links as much as possible and where possible. Well, you know the rest of the reasoning. 

With little question, a broad scope look at unannounced audits reveals that such audits produce more problems than they solve. The solution to the issue of distrust has several facets. A number of posts in this blog explicitly or implicitly discuss some of these facets. Here are links to some:

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Posted By Felix Amiri
Felix Amiri is the current Food Industry Chair of GCSE-Food & Health Protection


  1. Interesting. New to me about the distrust.,

  2. Root causes of mistrust.

    Fraud exists within the industry and that customers need to protect their reputations.
    Setting up a food manufacturing business does not require the supplier too demonstrate any qualification in food safety / engineering competence etc
    There is no regulatory requirement for purveyors of foods to be qualified in food safety.
    Unchecked market forces favour the supplier that markets product at the lowest price. Food safety and product quality have a cost which is not always visible so most customers require internal or external assurance. The 'above board' manufacturer should not fear and should welcome unannounced audits.
    Suppliers do fear loss of contracts (justified and unjustified) and know that a customer will change supplier on cost or quality grounds, most contracts may have a relatively short notice of contract termination which may be disproportionate to the dedicated product investment for the customer e.g packaging NPD equipment costs etc.

    There are no simple solutions, manufacturers need to enter into contracts with their eyes open, especially when dealing with Companies which have a buying ethos that embraces a philosophy that any margin made by the supplier is money that should contribute to their own profit. Often suppliers case business 'at all costs' sometimes to justify minimum line capacity.
    Reputation protection / Corporate Social responsibility is key to Western consumer market.
    Any system which provides the required level of assurance needs transparency.

    Audits are not intended to educate suppliers, they are based on checking compliance with 'standards' which should reflect consistent documented good manufacturing practice.

    Would manufacturers prefer annual audits by third party accreditation bodies or by individual customers? Are manufacturers happy to absorb the costs of customer visits / inspections? If this is a condition of contract should this be capped?

  3. You made very good points, Neil. There are "no simple solutions" but practical solutions are possible if there is the will to cooperate without the interference of greed or political agendas.

    As for audits not educating, there seem to be a slight contradiction with your earlier observation: "The requirements for setting up a food manufacturing business do not require the supplier to demonstrate any qualification in food safety / engineering competence etc. There is no regulatory requirement for purveyors of foods to be qualified in food safety."

    While I agree that auditors are not educators, the audit system is expected to open the eyes of audited purveyors of food to the requirements for ensuring food safety and quality - this is education. That said, I concede to the fact that the education bit is badly relegated because of current setup and approaches to auditing.

    Finally, distrust is the reason behind the need for customers or third parties to audit suppliers. If suppliers can be trusted to behave in civilized (socially responsible) manner; if suppliers are determined enough to be educated on the methods and means for ensuring product safety and quality; if suppliers are truly committed to ensuring product safety and quality without allowing greed and profit-making cunningness to interfere; external (third party or customer) audits and inspections, if still favored, will have a different focus and will be administered differently (better). If suppliers can be trusted, there will certainly be stronger, more trustworthy and dependable internal audits (self-imposed audits by suppliers) where there is genuine commitment and complete transparency.