Driving digital auditing in supply chain sustainability

 digital drive in supply chain sustainability

Due to travel and site visit restrictions throughout 2020 due to the pandemic, Electrolux collaborated with partners to create new digital tools to keep in touch with suppliers and conduct audits.

Transforming how we audit our suppliers – remotely

Electrolux conducts around 350-400 supplier audits around the world every year. The majority of audits involve a physical presence from our in-house team that largely covers China, Mexico, Eastern Europe and Thailand. With knowledge of local language and legislation a necessity, other audits are covered in person by third party external partners that Electrolux has developed a long and trusted relationship with and who audit to our standards.

As the coronavirus pandemic put countries into lockdown, making travel and physical visits to supplier sites more challenging, Electrolux investigated opportunities for remote auditing. The introduction of digital audits took a precautionary, selective approach.

“There were some countries and audits where digital audits made more sense and we identified suppliers that we have visited regularly and those that could handle a digital audit setting,” explains Cecilia Nord, Director, Electrolux Responsible Sourcing. “We selected suppliers that were more mature in their processes and digitally secure. Those we historically have a stable relationship with and know from experience that they strive to be a good partner.”

New demands for remote audits

What quickly became apparent was the increased preparation required in advance of the audit. This involved a pre-meeting between Electrolux auditors and the supplier team to discuss the documentation and data required for review.

“Submitting all the supporting evidence from the audit document list involved a lot of work for the supplier since there are around 80 documents to review including studies, permits, licenses, training records, employment contracts and so on,” explains Jesus Garcia Sanchez, Electrolux Responsible Sourcing Auditor, Mexico.

This was followed by a remote factory tour where Electrolux, or its auditing representative, designed the route. “It had to be a supplier where we had previous physical knowledge of the site, to recall the areas that we were interested in and what the factory looked like so they couldn’t guide us away from things that they didn’t want to show,” adds Nord. 

In total, Electrolux completed 33 digital audits in Mexico, and one each in Poland, Romania and Turkey during 2020.

“The involvement of both sides is vital for successful cooperation,” says Michal Matkowski, Electrolux Responsible Sourcing Auditor, Europe. “Electrolux has open-mindedly supported suppliers ready for new challenges and a positive aspect is encouraging and mobilizing our suppliers to digitalize their document database – in this way we create a base for easier digital audits in the future. In my opinion, it does not replace the standard onsite audit, but we have had to be flexible and adjust our methods to the current situation.”

The intention is not to replace in-person audits but continue to use digital audits in the future as a method to increase coverage of the company’s over 2,000 suppliers globally and make them more cost efficient.

“There will always be a need for physical visits because there are situations where you need to be there to cross check and challenge people on site,” Nord says. “But this approach will allow us to focus in-depth on suppliers that really need our attention whilst maintaining a virtual and digital dialogue and oversight with our longstanding and mature suppliers.”

On the MOVE – more than your average app

In 2020, Electrolux joined forces with other companies in Thailand to deliver a digital tool that provides easy access to information and training for vulnerable migrant workers.

The MOVE app was launched in collaboration with the MOVE network – an initiative that includes Axfood, HP and the UN International Organization for Migration – to promote the rights of the estimated five million migrant workers in Thailand and raise knowledge on ethical recruitment for factories. 

Essentially, it’s an information and training hub that promotes knowledge on issues such as health and safety and labor law. It enables workers to be aware of their rights and empower them make their voices heard in situations that are unsafe and unfair and provides crucial up-to-date advice on how to act during the coronavirus pandemic.

“Looking deeper into the supply chain of any organization brings you to sub-suppliers, which are often local companies requiring lower-skilled labor, and that’s where migrant workers are more likely to be found,” says Nord.

The initiative  builds on and extends the cooperation the company has long had with over 100 direct suppliers in the country to secure decent and fair working conditions.

“To encourage and share best practice in responsible supply chain management and ensure people understand their rights, education is a vital tool to be able to make informed decisions," concludes Nord. “It is a smart solution and a powerful information platform that can reach migrant workers who have access to smartphones and readily use mobile technology daily as a communication tool.”

Read more on our approach and progress in our Promise Drive supply chain sustainability.