Letting your vendors own the process and self-manage their corrective action plans leads to more successful compliance.
- When vendors manage their own corrective action plans, they have greater success
- Effective implementation of corrective actions will only take place when they are owned, designed, and championed by a supplier
- It’s about ownership, and this only happens when your suppliers understand the financial and operational benefits of implementing improvements
- Transparency is required: you must be transparent about expectations, and your vendor must be transparent about the corrective actions they are taking
- The goal is continuous improvement through corrective action
- Dictating how the corrective action plan will be implemented isn’t a recommended approach, but you can certainly dictate the elements that must be contained in every plan.
Compliance takes cooperation and collaboration across the entire supply chain. There is a lot at stake. Consumers demand that the companies they buy from meet corporate social responsibility (CSR) objectives, and they want to see proof. It’s all about transparency these days, and if you can’t prove that you are working to meet CSR goals, they’ll move on to a competitor who is.
In addition to providing transparency for consumers and regulators, it is important to be transparent with vendors about your company’s sustainability goals. You’ll weed out those suppliers who aren’t up to the task, but there are others who will try, fall down in some areas, yet want to be compliant. It’s important that they both accept accountability and take measurable action to improve.
Imposing plans on people or companies rarely works. It’s simple psychology. That’s why it is important to empower your vendors to develop and self-manage their corrective action plans when needed. Once you define and describe the problem and its scope, you’ll want your vendor to devise corrective actions and follow up. Here’s why self-managed plans work, and what should be in them.
Why Self-Managed Corrective Action Plans Make a Difference
Allowing vendors to develop their own corrective action plan (CAP) rather than imposing one will go much farther when it comes to fostering both cooperation and collaboration and improving the chance for success. One size does not fit all, each business is unique, and they alone know their internal processes. They are in the supply chain trenches and realize the obstacles they might face related to implementing CSR improvements.
Understanding vendor perspectives aids in transferring ownership of the problem-solving process from you to the vendor. The more ownership a vendor takes, the more likely it is that implementation of their corrective actions will be successful.
Effective implementation of corrective actions will only take place when they are owned, designed, and championed by a vendor. This level of ownership only happens when they understand the financial and operational benefits of implementing improvements. The financial losses they would suffer are, of course, implicit if they fail to take the right action.
You set clear expectations at the beginning, and you’ve supplied a supplier corrective action request (SCAR) to your vendor. What should be in their CAP?
12 Items That Should Be Part of Your Vendors’ Corrective Action Plans
You’re not going to be dictating what or how your supplier takes corrective action, but you can define what should be in that plan. That plan should include a clear statement of understanding of the problem, the desired outcome of the plan, and a list of specific steps. Let’s explore further the elements of an effective plan, using Lockheed Martin’s SCAP requirements as an example:
- Details of the compliance issues as understood by the supplier.
- The findings of a root cause analysis.
- How each issue will be addressed, and what issues allowed non-compliance.
- What short-term corrective actions will be taken until long-term corrective actions are implemented to prevent reoccurrence in the interim?
- What are the long-term corrective actions?
- What preventative actions will be taken in the future?
- What are the containment plans?
- Based on the planned actions, what improvements are expected?
- What are the target dates for implementation of the planned actions?
- Who are the parties responsible and what is their contact information?
- What is the plan completion date after internal validation?
- What is the schedule of planned reviews to ensure plans are being implemented as scheduled? This should include:
- Progress made
- The outcome and effectiveness of any completed actions
- Metrics that track action performance and effectiveness
The goal of any SCAR and a corresponding CAP is continuous improvement. You can facilitate this, as well as collaborative compliance, by allowing vendors to take ownership of their issues and corrective actions through Logility’s compliance solution. This provides a centralized system to evaluate, manage and report, simplifying the complexities of vendor compliance and CSR management.
This solution also facilitates onboarding, so vendors know your clear expectations. And it provides a process that offers full transparency and accountability for the collaboration that leads to complete compliance, risk mitigation, and the ability to claim that you, and your suppliers, have the credible sustainability that’s essential for today’s markets.
Empower Your Vendors to Empower Your Supply Chain
To catch compliance issues before they hurt your business takes complete visibility. Logility’s digital supply chain platform helps you meet your CSR goals with vendor, sourcing, and compliance management.
Logility’s platform accelerates the sustainable digital supply chain by leveraging data-driven tools such as advanced analytics, ML, and AI that empower your business with greater visibility. This means better sourcing decisions, more accurate planning, accelerated cycle times, improved precision, and increased operating performance, all while meeting your CSR goals.
We help organizations sense and respond to changing market dynamics and more profitably manage their global businesses to become resilient, sustainable enterprises. It’s time for a digital, sustainable supply chain. Reach out to our specialists today to discuss our supply chain solutions.