Auditing Suppliers - Supplier audit by a customer who is also a competitor

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defogster

Can someone clarify a question I have been asked.

Can we as a supplier be audited by our customers, customer (who in this case is also a competitor in our market). They want to audit it us and have as our customer (their Supplier) to be present?

Thanks in advance for any advice.
 
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jasonb067

Re: Auditing Suppliers

We have had this situation in the past both with suppliers to us that are competitors and supplying to our competion.

This is something that needs to be determined by Upper Management during the program, contract review phase. Every company has the right to limit who is allowed in their facility (with the exception of the government). Also, every company has a right to choose where they buy parts from. You may be able to offer alternative such as, compelting the assessment yourself, third part etc. but to allow or not allow this group into your facility is an Upper Management decision.
 
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keres

Re: Auditing Suppliers

Audit from customer is always possible and permitted, but you always can refused it. In this case is possible to lose the client.
The choice is yours!
 
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tomvehoski

Re: Auditing Suppliers - Supplier audit by a customer which is a competitor

Definitely a management decision to allow, not allow, or allow limited access. It would not be above many companies to use a situation like this to steal ideas, trade secrets, etc.
 

Randy

Super Moderator
Re: Auditing Suppliers - Supplier audit by a customer which is a competitor

You can only be audited by those you let into the building. As for the decison to do so, there is no absolute right or wrong. As put by Harry Callahan "Do you feel lucky..?"
 
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Ralph Long

Re: Auditing Suppliers - Supplier audit by a customer which is a competitor

What's the purpose of their audit?

If they are a good customer you would want to provide some amount of cooperation, but as a competitor, you should limit their access to confidential areas/documents....IF you decide to allow them to audit at all.

As others have mentioned - you are not required to be audited.
 

ScottK

Not out of the crisis
Leader
Super Moderator
Re: Auditing Suppliers - Supplier audit by a customer which is a competitor

I'm looking at a similar situation right now.
I might suggest a middle ground - a desktop audit where they are welcome to come in, sit in the conference room and review procedures and certain records (training records, production paperwork for products made for them, calibration records, pest control records, and the like).
But no plant tour, and some work instructions will be off limits.
 
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arios

Re: Auditing Suppliers - Supplier audit by a customer which is a competitor

If you allow an assessment, make a plan to decide which information you will present to the auditors. If there is highly confidential and proprietary information, then make sure they understand and limit the access.

You also have them signing a non-disclosure agreement for certain information.
 
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RosieA

Whatever you decide to do, be sure you have a signed Non-Disclosure Agreement in place before they set foot in your plant.
 
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Kevin H

Our situation is somewhat similar, but slightly different as well. We consider certain parts of our mixing operations to be proprietary (in my opinion for both good and not so good reasons).

We do not permit our customers to audit those areas - in fact we feel so strongly about the proprietary nature that the areas in question are separately enclosed with limited access and no visual indication of the actual equipment in them. We have had customers, including our largest one, complain about lack of access but we have stood our ground and have not suffered a loss of sales as a result.

Coming originally from the wrought steel industry, where the old tour/audit response in the 1960's and 1970's was no cameras and then having overseas customers bring in artists to sketch the details of operations so they could go back and implement improved processing based on US work, I'm skeptical of the effectiveness of non-disclosure agreements. It's not effective to shut the barn door after the horse has left the stable.
 
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