How SMETA Audit and Sedex Certification Connect: Why Global Buyers Prefer Indian Suppliers

Buyers constantly ask the suppliers two questions: Are you in Sedex and do you have a SMETA report? To answer this question one can say that SMETA audit and Sedex registration are connected like two sides of the same coin. Sedex is a place where your ethical information is stored, SMETA is the tool that checks your data, and together they provide independent proof of your responsible business.

Sedex (Supplier Ethical Data Exchange) is a non-profit organisation that develops ethical standards for supply chain relations, while SMETA is a method of audit it developed. The guide is written in order to tell about the connection between these two, about their differences, advantages for buyers and information about them for Indian suppliers who are going to use them.

The guide is informative, there will be some comparison and important points for you.

What Is SMETA Audit and Sedex Certification, Exactly?

Sedex operates a platform which allows the companies to share their information regarding the conduct of the suppliers, and SMETA is the name of the audit methodology which Sedex has developed to evaluate the supplier’s conduct.

Short Answer: Sedex is an independent not-for-profit organization platform for sharing information regarding the ethical conduct of the supplier, and a SMETA audit is the audit methodology which was developed by Sedex to evaluate such conduct.

Here are a few things which one should know in advance:

• Sedex evaluates the conduct related to labour relations, health and safety, environment and corporate governance.
• SMETA audit is one of the most widely used ethical audit methodologies in the world.
• SMETA audit is conducted by trained auditors at the supplier’s facility according to the specific set of guidelines.
• For the Indian suppliers, Sedex and SMETA audit combined are the most effective means of demonstrating their ethical standards to the foreign buyers.

Why Global Buyers Prefer Certified Suppliers

Why do buyers prefer SMETA-audited suppliers that are members of Sedex? Here are the reasons:

1. Claims Are Replaced with Verification

When a supplier undergoes a SMETA audit, it is an independent third party check and a buyer will not need to rely on information provided by the supplier. That is why an audit is credible.

2. Provides Visibility to Buyers

The Sedex platform allows sharing supply chain information between companies. Therefore, buyers will have access to all necessary information in one place.

3. Is in Alignment with a Company’s Sourcing Standards

Global corporations acknowledge SMETA audits and that is why a SMETA-audited supplier will make it easier for a buyer to approve this supplier as they don’t need to conduct an assessment themselves.

4. Demonstrates a Reliable and Professional Supplier

A supplier that goes through a registration process and undergoes a strict SMETA audit demonstrates professionalism.

The Core Benefits of SMETA Audit and Sedex

Here’s where the benefits actually show up, in practical terms.

Transparency in the Supply Chain

The Sedex system provides you with the opportunity to provide information, which buyers can access. This transparency may be the deciding factor between those suppliers who are accepted and those who are not.

Information Presented to Several Buyers at One Time

The Sedex system will allow you to send SMETA audit information to several buyers simultaneously, instead of performing the same process several times.

Third Party Validation

The SMETA audit will provide an independent confirmation that your company complies with ethical standards, which will have more value for the buyers.

Comprehensive Information

The SMETA audit will cover labour practice, health and safety, environment and business ethics. You receive one comprehensive audit rather than separate assessments for each component.

Reporting for Actionable Results

The audit report generated by the SMETA process captures all findings and corrective actions to be taken. This gives you a list of areas for improvement before the next audit.

Wide Acceptance

Since SMETA is accepted by multinational corporations, the audit report will be valuable to many buyers rather than just one.

Flexibility in Initiation

You can become a member of Sedex without conducting the audit process and then decide on 2 or 4 pillar audits according to your requirements.

SMETA Audit and Sedex Certification: Quick Comparison

This table compares a supplier without Sedex or SMETA to one that has both.

Benefit	Non-Compliant Supplier	Sedex-Registered, SMETA-Audited Supplier
Supply chain transparency	Little shared data for buyers to review	Information shared through the Sedex platform
Verification	Ethical claims rest on the supplier’s word	External check by a trained auditor
Audit results	Nothing documented to show buyers	Detailed SMETA report with findings and corrective actions
Reaching several buyers	Each customer asks separately	Results shared with several customers at once
Market recognition	Weaker credibility with large buyers	Recognised by large corporations worldwide
Improvement path	No clear view of gaps	Actionable insights to improve practices

 

It also helps to see how the two differ on their own:

• Purpose: Sedex certification ensures good practices in procurement whereas SMETA is concerned about raising labor standards, health and safety, environment and business ethics.
• Process: For Sedex, you register yourself and are subject to audit by an accredited auditor, whereas, in case of SMETA, trained auditors conduct audit based on set procedures and prepare a report.
• Frequency: There is no defined validity period for Sedex certification although re-testing may become necessary due to customers’ requirements or changes in legislation, whereas SMETA audits are conducted either once or twice a year.
• Reporting: In case of Sedex, you receive a certificate that demonstrates your level of compliance and, in case of SMETA, you receive a detailed report.

What Does It Take to Meet SMETA Audit Requirements?

Meeting SMETA requirements means showing an auditor that your site meets standards across the audit pillars. A SMETA 4-pillar audit is the fuller version, and these are the areas you will work on:

• Employment and Remuneration – how your workers are employed and paid, as well as labour rights.
• Health and Safety – how you ensure safety of your workers.
• Environment – your environmental management and corporate social responsibility practices.
• Business Practices – how you conduct your business ethically and with integrity.
• Sedex membership – registering with the Sedex portal to enable sharing of the audit outcomes with your customers.
• Corrective Actions – how you plan to address the findings highlighted in the audit report.

Common Mistakes Indian Suppliers Make When Pursuing Sedex and SMETA

• Given that Sedex and SMETA are one and the same. In which case Sedex is the tool and organisation, while SMETA is the methodology; hence you have to understand both.
• Selecting an incorrect audit scope. A 2 Pillar audit looks at labour rights and health and safety, whereas a 4 Pillar audit takes environment and business into consideration, hence the need to select a suitable audit scope.
• Considering the audit as an isolated activity. A SMETA audit is carried out once or twice in a year, therefore ensuring that standards are met all the year round.
• Failing to implement the corrective action plan. The report outlines what findings have been noted and what actions need to be taken in order to improve the next audit score.
• Registering without doing anything further. Whereas registration gives you much more flexibility, an audit conducted by a third party gives stakeholders more confidence.

When SMETA Audit and Sedex Certification Make the Most Sense

• The buyer or customer has requested for Sedex membership or SMETA report.
• You have clients who are multinational companies recognizing SMETA.
• You wish to present just one audit report to multiple clients rather than repeating audits.
• You are at an initial stage of becoming ethical and need to begin with transparency via Sedex membership.
• You need third party authentication to conduct business ethically.
• You need an improvement list of actions to take based on the audit report.

Your buyers have not yet asked for any such document yet; however, preparation is worthwhile.

Key Takeaways

• Sedex is a third-party independent nonprofit organization used to share the information about suppliers’ ethics, while SMETA is the audit tool developed by Sedex.
• A SMETA audit is a third-party audit which generates a report with findings and recommendations.
• The audit outcome can be provided to a number of customers simultaneously using the Sedex system.
• SMETA 4-pillar audit involves employment and compensation, health and safety, environment, and business practices.
• A SMETA audit is carried out one or two times a year depending on the customers’ requirements.
• Registration on Sedex without SMETA audit is possible, but SMETA audit provides more credibility.

Conclusion

Benefits of SMETA Audit and Sedex Certification include transparency, third-party validation, an audit report to learn from, and recognition by big buyers. Buyers are in need of knowing who is in their supply chain, and something that used to be considered an additional nice thing is now becoming an obligation. By applying both tools together, and doing SMETA audits frequently, you can stay in line and win trust. Once you are ready to start, contact us – Legal4sure.