The Client: A Fortune 500 Retailer

Overview

Allegations of unsafe working conditions and non-compliance with labor standards in supplier factories have upped the pressure on brand-led businesses to ensure that Corporate Social Responsibility (CSR) and social compliance initiatives are effectively implemented and monitored across their supply chains.

As part of its CSR activities, the client developed and enforced comprehensive social compliance policies and a code of conduct to ensure that all participants across its supply chain are treated fairly and ethically. Internal audit teams and third-party compliance monitors actively audit both new and existing supplier factories for conformance to social compliance requirements. If non-compliance is identified, the client takes appropriate corrective action, and follows it up with regular evaluation.

As time went on, the client’s supplier base grew larger and more widespread, making it increasingly complex to manage supplier audits and social compliance.  MetricStream’s integrated social compliance solution provided a way to simplify and improve the efficiency of supplier audits, and drive excellence in terms of setting up higher industry benchmarks for social compliance.

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Solution

In light of the challenges faced, the client chose to implement a new technology framework that would support, enable, and strengthen its social compliance initiatives. After considering several solution providers, the client chose MetricStream Social Compliance and Audit Management Solution. Built on the scalable MetricStream GRC Platform, the solution is helping the client standardize, integrate, simplify, and enhance visibility into end-to-end social compliance processes and supplier audits.

Below, in greater detail, are the key capabilities of the solution:

Supplier Onboarding and Information Management
The MetricStream solution enables a structured, systematic, and workflow-based approach to supplier onboarding and information management. A centralized repository helps consolidate, access, and easily search all supplier and factory information, including company profiles, financial information, service offerings, and website information.

Using the solution, suppliers can create a new profile, add new factories, and submit labor policies, safety standards and certifications, building permits, and other relevant data to the client. Suppliers can also log in to the solution at any time and access their information, modify the details, and route it to the client for review and approval.

Supplier and Factory Audits
The MetricStream solution provides a centralized framework to manage all audit processes, data, and entities across two main types of supplier audits:

  • Audits of Potential Suppliers/ Third-party Due-Diligence: The solution streamlines the entire audit lifecycle – right from gathering social compliance information from the supplier (e.g. Do they hire underage workers?), to validating this information through supplier factory audits, to reporting audit findings, communicating issues and corrective actions to the supplier, conducting follow-up audits, and finally, deciding whether or not to approve the supplier. This streamlined approach helps minimize redundancies, and improve the cost-efficiency of each audit. 

    The solution also helps the client efficiently categorize and differentiate between those potential suppliers which have already been validated by a leading third-party sourcing and trading company, and those that haven’t. Accordingly, the client can save time and resources, by focusing its audit efforts only on those suppliers that haven’t been already validated.
  • Regular Annual Audits/ Third-Party Audits: The solution facilitates a standardized and tightly closed-loop approach to all annual and third-party audit processes – ranging from audit planning and scheduling, to audit execution and field work, to reporting of audit findings, to issue remediation.

Audit Planning and Scheduling
The MetricStream solution integrates information about suppliers, factories, and previous audits, and provides automated alerts to help the client determine which factories need to be audited, by when. The solution also provides intuitive tools to schedule an audit, and assign tasks and responsibilities either to an internal auditor or third-party compliance monitor. Both entities gain a consolidated view of audit schedules, audit coordinators, list of factories that need to be audited, tasks required, and other important details.

To help the client enhance audit prioritization, the solution integrates the results of supplier risk assessments, to highlight high risk suppliers who, for instance, run a factory in a country where there have been multiple industrial fires or accidents. Accordingly, the client can proactively schedule an in-depth, unannounced audit to determine if the supplier should be partnered with.

Audit Scoping
The MetricStream solution helps the client simplify and accelerate the audit scoping process for potential supplier audits, follow-up audits, and regular annual audits. One of the ways it does this is by mapping each supplier to their respective factories, and providing a comprehensive view of these inter-relationships. For instance, the solution might indicate that multiple suppliers are sharing the same factory. Therefore, instead of conducting several separate audits, the client only needs to conduct one integrated audit, thus saving time, costs, and resources.

The solution also provides capabilities for users to select specific questionnaires or sections of questionnaires from the centralized solution library, and include them in the audit, depending on its scope. Additionally, users can include historical audit findings, issues, and action plans related to a particular supplier or factory to cross-check and validate if the same has been effectively implemented.

Audit Execution
The MetricStream solution provides capabilities for checklist-based audits with 400 question fields spanning various social compliance areas such as forced labor, child labor, disciplinary practices, wages, working hours, health and safety, discrimination, and environmental compliance.

Using the solution, internal auditors and compliance monitors can quickly access their assigned tasks, capture information, and upload their findings which are then automatically routed to the relevant stakeholders in the retailer and supplier organizations.

The solution supports configurable workflows to submit audit details for review and approval. If required, the client can send back the details with comments seeking additional information from compliance monitors and suppliers.

A unique offline capability allows auditors and compliance monitors to conduct their fieldwork in remote factory sites and retail stores without network connectivity, using portable handheld devices. This data can later be seamlessly and easily synchronized with the centralized audit database.

Issue and Corrective Action Management
Any issues identified during the audit, along with the expected corrective actions, are communicated to the relevant suppliers through the MetricStream solution via automated notifications and emails. Through a web-based interface, the solution helps the client closely collaborate with the suppliers to ensure that the corrective actions are effectively implemented. A closed-loop and systematic remediation process helps ensure that the issue doesn’t recur.

Follow-up Audits
As with the initial audits, the MetricStream solution streamlines end-to-end follow-up audit processes to ensure that suppliers have effectively resolved the identified issues. Multiple follow-up audits can be enabled and recorded till the client is satisfied with the supplier’s efforts.

Reporting and Dashboards
The MetricStream solution enables the client to standardize reporting processes across all suppliers. It also provides a wide variety of reports on lists of factories and suppliers which have successfully completed the audits, lists of outstanding issues, follow-up audits required, schedules of audits, lists of assigned auditors, time lines, and other critical data.

Powerful graphical dashboards provide real-time, top-level visibility into the status of social compliance at every point of the supply chain. Drill-down capabilities help view the data at finer levels of detail, while trending analyses enable compliance managers to stay in touch with the ground reality and progress on social compliance programs at the supplier location.

Challenges

Before implementing the MetricStream solution, the client faced several challenges, including:

A Vast and Complex Supply ChainGiven that there were thousands of suppliers and sub-suppliers scattered across different geographies, the task of regularly auditing supplier factories was becoming increasingly difficult.

A Siloed ApproachSocial compliance activities, policies, requirements, and audits were managed independently by different teams using different point solutions and processes. The lack of collaboration and standardization led to redundancies, duplication of effort, and reduced efficiency.

Cumbersome Manual ProcessesSupplier audits were managed and reported using numerous bulky spreadsheets that were not only time-consuming to manage, but also difficult to keep track of or consolidate.

Insufficient VisibilityThe lack of complete transparency into the supply chain made it increasingly complicated to track high-risk suppliers, or identify potential compliance gaps and issues in a timely manner.

Why MetricStream?

The client chose MetricStream for the following reasons:

Integrated Approach: The MetricStream solution’s ability to unite all suppliers and social compliance activities in a cohesive framework fosters a culture of responsibility and accountability.

Scalability and Flexibility: The solutions’ underlying GRC platform can quickly scale up to address growing social compliance requirements, as well as large and complex organizations and supply chains extending across the globe.

Extensibility: The MetricStream solution can be extended, if required, to address other GRC needs such as supplier risk management, policy management, or corporate compliance management.

Powerful Compliance and Risk Intelligence: The solution helps synthesize information from across the enterprise into coherent reports and dashboards which, in turn, enable leadership to track the status of social compliance, and minimize risks.

Benefits

  • Using the MetricStream solution, the client has been able to:
  • Streamline the complete range of social compliance activities and supplier audits across the global supply chain
  • Control and monitor all social compliance processes, data, and audits from a single, centralized framework
  • Save costs, time, and effort by automating various social compliance and supplier audit workflows
  • Enable real-time tracking of social compliance processes across the supply chain
  • Quickly identify any potential issues and gaps in the social compliance program
  • Improve collaboration with suppliers, auditors, and third-party compliance monitors on all social compliance activities and corrective actions
  • Protect brand value, sustain stakeholder trust, and effectively fulfill CSR responsibilities

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