Enhancing Supply Chain Transparency for a Family-Owned Automotive Supplier

Challenge
A family-owned SME, supplying tools to the automotive industry, faced growing demands from clients for increased visibility into their supply chain management, particularly in China. While the company regularly visited its Chinese suppliers, there was no formal documentation to provide proof of these inspections, raising concerns among clients. To meet these transparency needs, the company sought a solution.

Solution
Scandic Sourcing, with its extensive experience in managing supplier relationships in China, provided a solution through its Scandic Supplier Code of Conduct Program. This program offers a systematic approach to stakeholder engagement, risk identification, and performance improvement tracking.

After conducting a stakeholder survey and analyzing the supplier network, Scandic Sourcing identified several areas for improvement. Many suppliers lacked proper systems for environmental health and safety, and employment policies were vague, with issues such as unclear overtime pay regulations and undefined working hours. Most suppliers had been selected based primarily on cost efficiency, with limited attention to these critical areas.

Scandic Sourcing created a tailored program to meet the company's specific needs. By adapting international supplier code of conduct standards to local laws and industry requirements, they set up annual supplier audits. The audit results were presented in a visual scorecard format, providing a clear overview of each supplier’s status and progress over time.

Results
The audits revealed significant gaps, particularly in factory safety measures. After each audit, Scandic Sourcing held follow-up meetings with factory management to present a list of required corrective actions. These were tracked through ongoing communication until the next audit.

Over time, the suppliers made substantial improvements, especially in the area of factory safety. The company was able to provide detailed updates to its large automotive clients, showcasing its proactive efforts to improve its supply chain. Despite some areas still requiring further improvement, the transparent reporting and proactive management were met with strong support from the company's clients.