A social responsibility
A social compliance audit involves checking whether a factory or business satisfies certain employment standards.
TyJohn Hardin, from Australian quality services company Qualspec, says his company undertakes social compliance audits in numerous overseas countries and has a practical approach to its work.
"We make sure that the audit is a positive experience for both the overseas supplier and the Australian client. We do this in two ways. Firstly, we try to work with the factory to help it rectify shortcomings and improve performance in the most cost-effective manner possible. Secondly we recommend that Australian clients get us to do a combined social compliance and quality audit; in this way the Australian clients not only satisfy their social obligations but also receive feedback on the factory's production and quality capabilities and how these can be improved.
"Most importantly, we take the time to develop a realistic action plan for the factory to address their social and quality shortcomings and the Australian client can monitor the factory's progress."
Social compliance audits can, of course, cause problems when serious breaches are uncovered. Such breaches may include the use of child labour, prison labour or extremely unsafe working conditions. Experience has shown, however, that there can be a substantial consumer backlash when these types of breaches are uncovered by community groups. Company conscience may bring about corrective measures but public exposure is far more threatening. Companies, through their audits, can help to avoid potentially serious problems.
"From our experience, serious breaches, such as the use of child labour, are actually uncommon," Hardin says. "The main problems we find relate to safety standards and practices in the factory, as well as the sanitary conditions in living quarters and bathrooms. Most of these shortcomings can be fixed relatively easily but when we do find serious breaches it is up to our Australian client to make a commercial and ethical decision as to whether they continue to deal with the factory."
A common issue in China is excessive overtime by workers. Chinese law limits overtime to three hours per day but most workers, especially those living in dormitories on site, want to work as much overtime as possible. With an increasing demand for experienced workers to feed China's growth, there are few instances of wages below those set by law and workers are keen to earn extra through the compulsory overtime payments.
When a combined social compliance and quality audit is undertaken auditors such as Hardin's work with their Australian clients to determine the production and quality issues of main concern.
Hardin says his company tailors the audit for its Australian clients and there may be slightly different issues to be investigated at individual factories.
"We have clients who, for example, may be concerned about regular late deliveries from a particular factory and part of our job is to determine the reasons why and how this may be fixed. Others may be more concerned about quality procedures at the factory and how these could be improved.
"We instruct our trained auditors to pay particular attention to such issues and we can then help both the factory and our Australian client."
Audits and inspections used to be a costly exercise but increasing competition means punters can now expect to pay around $500, excluding any internal travel, for a combined social compliance and quality audit in countries such as China, Philippines, India and Indonesia.
"As it becomes standard practice for major retailers to insist on only dealing with socially-ethical suppliers the need for documented audits follows suit. The key will be to turn this requirement into an effective supply management tool by undertaking an overall production and quality audit at the same time."