The Consequences of Audit Programme Absence: A Manufacturer's Risk in Dealer Networks

Abstract This paper examines operational and strategic issues that Original Equipment Manufacturers (OEMs) encounter when dealing with dealer networks operating without formalised Dealer Operating Standards Audit Programmes (DOSAPs). It examines the role of lack of institutionalized auditing systems in performance and risk management challenges in major business processes especially in assets intensive sectors like heavy machinery. The study draws on the qualitative data of a two-year doctoral research where in-depth interviews with senior executives of OEMs and dealerships in Europe and the Middle East were conducted. The discussion is based on the effect of the absence of audit frameworks on five main risk areas, including operational, strategic, financial, reputational, and customer experience, with particular emphasis on the complicated operating conditions in the Gulf region. The results indicate that the absence of DOSAPs creates high performance gaps across 9 interdependent dealership areas such as governance, sustainability, marketing, workforce development, machine sales, customer solutions, parts logistics, service and aftermarket operations, and rental and used equipment management. These loopholes compromise the control of manufacturers, generate discrepancies in service provision, promote warranty abuse, and warped customer interaction, which jeopardises brand reputation and profitability in the long run. This paper notes that audit programmes are not just compliance tools but likely strategic instruments of risk reduction and sustainable performance within the decentralised dealer networks. This study raises the crucial issue of effective auditing systems in maintaining the quality of operations, operational fit and brand safety in the heavy machinery industry by emphasising the increased dangers posed in the Gulf region by the environment and operational conditions.