Let’s tackle audit fatigue.
You are probably tired of hearing about this ever-present topic. But imagine how tired your partners are when they experience it.
Audit fatigue is the term that’s been widely used for decades to describe the burden that supply chain partners feel when their operations undergo multiple social responsibility audits. To be fair, repeated audits of the same facility can play an important role if there are serious deficiencies that need remediation and constant inspection.
But that’s not what’s happening here.
The fatigue sets in deeply when factories are forced to pay for audits that check for the same (or slightly different) factors, often times using the same auditors, within quick succession of each other for different brand or retail customers. It’s not uncommon for some factories to report being audited 10 or 20 times a year – for largely the same factors.
Sometimes the accounts from the audit fatigue playbook can be downright ridiculous. We’ve all heard the story of factories having to mount several hooks so they can quickly move fire extinguishers to comply with conflicting requirements calling for these devices to be hung at different heights.
These repeated, duplicative inspections create multiple problems. Chief among them are the expenditures in time and resources, born disproportionately by the factories that are the supply chain partners who are least able to afford these extra costs. Resources that could be deployed for training, skills development, wages, and other worker enhancements are instead spent to inspect the same thing over and over again. Simply put, audit fatigue is not a good return on investment.
What’s worse is that duplicative, conflicting audits are usually based on duplicative, conflicting requirements and codes of conduct. Factory managers have a difficult time navigating this confusing landscape and it’s even tougher for workers, for whom clarity is critical to ensure they have a safe, ethical, and healthy workplace.
But one of the biggest intangible problems is the message that is sent. In an effort to exhibit and test for responsible behavior on the part of their supplier partners, companies that contribute (even unwittingly) to the audit fatigue problem by demanding duplicative inspections are exhibiting decidedly irresponsible behavior.
This practice has persisted for decades – ironically – because of the significant and growing importance of social responsibility. Brands and retailers are often unwilling to share this function with others because they don’t want to outsource accountability for core values or consider CSR audits a competitive advantage. That approach was understandable when other options were not available. Brands and retailers needed to invest to run their own programs to protect their workers in their supply chains. However, smart accountability now demands more collaboration, particularly as the needs and requirements for ethical production grow. As we rely upon our partners to do more, we need to be smarter about how we make and assess compliance with those requests.
The good news is that there now exist a wide range of multi-stakeholder initiatives that professionally manage CSR at the factory level for stakeholders, including brands and retailers. Also, some of these programs permit brands and retailers to partner with each other to share resources and align approaches to eliminate duplication and make smarter investments in compliance.
Even multi-stakeholder initiatives that don’t specifically address social responsibility can serve as a forum for better cooperation among brands that can reduce audit fatigue. Of course, the big concern is that the proliferation of these programs could inadvertently make the problem worse and spawn a new form of “initiatives fatigue.”
Technology also creates opportunities for harmonization. Audits that are based on the same data can be uploaded and shared across platforms. Avedis Seferian, President and CEO of AAFA’s social responsibility partner WRAP – which is itself a way to tackle audit fatigue – often explains that the data from WRAP audits can easily be shared with retailers and buyers so that future audits can avoid those items that have been recently inspected or be timed to assess compliance after an appropriate interval.
Finally, industry efforts to institute better buying practices among a consolidated supplier base will lead to more responsible auditing practices. As companies foster longer term relationships with key factories, they will naturally be looking for ways to invest in those partners, reduce their burdens, and create supply chain efficiencies. Reducing duplicative audits is one such way. In fact, Better BuyingTM has started a conversation to drive home this point through tools, data, and assessments with the annual Better Buying Purchasing Practices IndexTM.
While these are good starts, we won’t move the needle until each brand and retailer commits and takes positive steps to address audit fatigue. Each company needs to ask itself questions like these: Is it accepting existing audits from multi-stakeholder programs? What is the return on yet another CSR audit if there are several recent audits that are available through multi-stakeholder programs? Does it have guardrails in place to measure and prevent redundant audits? How can the drive to more resilient and sustainable supply chains support more efficient audit practices? How can they ensure their initiatives don’t further fatigue their global value chain partners?
Audit fatigue is clearly out of fashion. It puts our partners and their workers at risk. It’s now time to bid farewell to this practice once and for all.
Stephen E. Lamar is President and CEO of the American Apparel & Footwear Association, the national trade association representing more than 1,000 brands in the apparel and footwear industry. Steve leads a dedicated team of professionals who represent AAFA members before the government, through the media, and in industry settings on key brand protection, supply chain and manufacturing, and trade issues. Steve also advises AAFA member companies on legislation and regulatory policies. Follow on LinkedIn.
