It’s not uncommon that many companies choose China to mass produce their products. But it’s not always a plain sailing for many companies.
Things could go awry in the middle of the project: your supplier might not be able to meet your needs by producing high-quality goods on time and on budget, the scheduled delivery is pushed off again and again, you’re not clear about the cost breakdown and suspect that you may spend more than is needed and thus losing the competitive edge… The list could go on and on and on.
This is why a proper supplier assessment is needed. Supplier assessment is a great way to tell you the capabilities of your supplier, and whether it’s appropriate that you keep the supplier relationship with your current supplier. In addition, it gives you a chance to look deep into the supply chain, and hopefully you’ll find the critical areas to drive the overall supply chain performance.
That said, it takes quite amount of time and resources to effectively assess or evaluate the supplier. So what should you do to make sure that you’re not squandering your money away? How can you make sure that the supplier assessment could help drive your supplier performance?
Here are 5 key areas that you should pay extra attention to. There are 3 to 5 important questions that you should ask in each of the aspect. Read on and compile your own supplier assessment strategy.
Business & finance
- What is your customer selection criteria and resources allocation policy?
- What’s your business growth strategy and road map for the next 3 – 5 years?
- What’s the average payment term for your current customers and new customers?
- How do you measure NPI (new product introduction) team’s KPI?
- Do you have mature policies, processes and systems to protect my IP?
- What’s the company production line utilization rate at this moment? What will it be in the coming 12 months?
- What tools/ systems do you use for production management?
- Does your company have experience to manage low volume/ high mix demand? If so, how?
- Does the management team possess English skills to ensure adequate communications or are there measures taken for sufficient communications?
Supply chain management
- Does the company have systematic records of qualifying critical materials supplier?
- Does the company have a system for materials planning, ordering, delivery schedule tracking and inventory management?
- Does the company have records of root cause analysis and improvement actions defined for delivery delay?
- Is there a continuous cost reduction program to ensure cost down?
- What methods or tools do you use to ensure traceability?
- Could you please provide an example to demonstrate your capability to perform failure analysis and root cause analysis onsite for most manufacturing processes and common materials?
- How do you qualify new suppliers? Could you please give us an example?
- Do you have experience in obtaining regulatory approvals (UL, CE, etc.) for your customers’ products? If yes, please provide examples and estimated certification costs and L/T.
Manufacturing & engineering
- Is there a procedure for new product introduction (NPI) and does the company do the phase gate (EVT, DVT, PVT) review? Please demonstrate with an example.
- Does the company have proven records to do the qualified Design For Manufacturing analysis and make proposal?
- Does the company have sufficient and capable equipment to manufacture the products to meet the tolerance requirements?
That concludes what we want to share today.
Should you have any question in assessing your suppliers, for example, if you’re not sure when to do the assessment, or how to review the responses you get from the supplier, feel free to reach out, and we’d be glad to help you out.