Like anything else in life, commodity trading is going to reward you most when you’re willing to do a bit of research. Learning things for yourself will put you in a better position to excel in the future, which is exactly why you’ll enjoy what we have to say in this article. Some would say that commodity trading is one of the most difficult ways to make money, but that isn’t the case at all you can be the wealthy friend if you’re willing to do a bit of work. Sure, some will say that there is luck involved, and there probably is, but you can do research and find the right investments in no time at all.
Doing a supplier audit is going to help you understand where your commodity is coming from, as well as what kind of quality you can expect when the commodity finally arrives. This is especially important in the world of commodity trading because you don’t want to put your faith into a supplier blindly, especially if you’re buying large amounts of any given commodity. There are certain situations where you’ll give your supplier the benefit of a doubt, but that’s only if someone you trust has recommended them or you’ve seen their work in the past.
We’re going to focus on what you do to see if a commodity is worth investing in, as well as if it’s going to come from a reliable supplier. Conducting a supplier audit is the smart thing to do as a commodity trader, and all of the most experienced commodity traders around the globe will say the same thing.
What Exactly is a “Supplier Audit”?
The concept of a supplier audit is simple enough, as like you would with anything else, you can use them to get information from commodity suppliers. As you grow and expand your reach around the world, you’re going to be dealing with more suppliers. As the demand grows, the threat of a negative performance does as well – when you don’t understand where your commodities are coming from, you’re leaving a gaping hole open for problems to seep in.
You can use a supplier audit to identify any trouble spots that could arise during your trading efforts, and the worst thing you can do as a growing brand is to deal with supplier issues. By going through a supplier audit you can ensure that the production process goes smoothly, allowing you to build up a sense of consistency. We’re going to look at some of the ways your supplier audit can help, as well as what it will help you identify.
Supplier Audit: What You’ll Find
The quality standards associated with your supplier will be noted throughout the supplier audit process. This means that you’ll be able to enforce a strict set of standards in regards to the quality of their commodity, and if they don’t meet it, you’re not going to do business with them. Going through a quality audit will let you figure out if there are any “risky” materials included within the commodity, and it will also help the supplier themselves (as calling them out on any mischief will help them stick to the industry standards many other companies are willing to meet).
You can also see how well they manage their documents, as valuable and high-quality documents need to be archived accordingly. While we’re in the digital era and all of that can be done online in most cases, you still need to go through a supplier audit to see if they’re keeping track of their files effectively. Whether it’s for inspections, general records, or even supplier approvals, you want a supplier that’s going to keep track of everything.
Using a supplier audit will also uncover any potential areas of risk, which is usually something that commodity suppliers are willing to talk about (unless they’re shady and should be avoided, of course). You’ll be able to see the life cycle of any given product, as well as figure out if there are any issues with production (like a lack of quality that could impact your price). The shipping process and even the engineering process will impact the quality of your products and create potential risks, so it’s important to identify those whenever possible.
Communication is key when you’re looking to build a long-lasting relationship with your suppliers, and usually, that’s something that a supplier audit can help with as well. You can identify whether your supplier is willing to consistently communicate with you, allowing you to see if they’re meeting your requirements and goals that have been set. When you know that they’re on schedule and meeting your goals, your rate of success with investments is going to increase significantly!
Conducting a supplier audit will also help with customer satisfaction, as you can communicate any potential issues to your supplier. If they’re respectable and you give them comprehensive quality guidelines, odds are they’re going to do anything they can to improve upon the manufacturing process. Customer satisfaction is a key component to your success, as sales are only going to increase when customers are willing to boast about your products, which is why you’ll always want to express the importance of customer satisfaction to your suppliers.
You can use a supplier audit to see which suppliers are currently on top, but you’ll also be able to see others that are struggling. The cost of quality can be a direct result of actions from your suppliers, and if you’ve ever purchased commodities from a supplier in the past and received a lackluster product, you can use the Cost of Poor Quality to recover some of the cost (should the manufacturing supplier choose to refuse a refund).
Saving money and time is a big deal when you’re trying to run a successful business, which is why the art of a supplier audit is one that you should always consider using.
To learn more about our supplier audit service, visit our expertise page!