Eyes and ears are the best tools a supply chain professional can use to manage and improve supplier performance.
Through a site visit, a buyer can determine if a new or existing supplier has the necessary leadership, organizational structure and operational process controls in place to meet the company’s material and service requirements.
Regular visits are the best method to help existing suppliers improve their performance by establishing and enhancing multiple lines of communication, allowing for technical and manufacturing support, conducting contract reviews and offering supplier development opportunities to further enhance performance.
Site visits often follow a detailed audit framework. Yet the less formal elements of a supplier visit can provide significant insights into the supplier, ones that can only be found by being up-close and personal.
Turning into the industrial park, the supplier's facility looms ahead. Let’s start our visit.
Outside the facility
- Drive around the building and look at the grounds. Is trash overflowing? Does the supplier recycle? Are the grounds clean and well maintained? These can indicate whether the supplier is a good neighbor. How is the parking organized? The outside of the facility can give you an indication of how the inside is organized, including the level of pride the organization has in its business.
- Review the welcome board. If your own name, the names of others or the name of your organization are spelled incorrectly, that may be an indication of company-wide poor process controls. A good test is to see how long it takes to be corrected after you identify the error. How are you welcomed? This is often a signal of the importance of your visit and your business.
In the conference room
- Use the visit as an opportunity to stress the performance objectives of your organization. Reinforce your need for zero defect quality, 100% on-time delivery performance, cost management and other important initiatives. Provide an update on your business and ask for one on the supplier’s. Market intelligence is critical to sales and operations planning for both companies.
- But don't linger here. Head to the manufacturing areas as quickly as possible. Resist the management slide shows. Look at the operation firsthand. That’s why you’ve made the trip.
At the manufacturing site
- Examine calibration stickers on test equipment. They should be visible and current. If the calibration is out of date the operation of the test equipment may be suspect. The functional tests that utilize the equipment may be invalid.
- Observe cleanliness and organization, especially in the manufacturing area. Is the inventory secure? Are the employees working in safe conditions? Do you feel safe? Have you been offered head, eye and ear protection?
- Review quality charts and postings. Many companies are proud of their performance. Let them brag a bit.
- Ask the supplier to "book, make and ship" you. That is, show you the entire process of entering a sales order, establishing the work order, purchasing and kitting the materials, building and testing the product, and packaging and shipping. Review documentation, process controls and paper flow. You might also want to follow one of your own existing orders through the system.
Throughout the visit
- Speak with lots of employees. Employees who work in an empowering environment often look forward to the opportunity to chat with customers. Ask permission to engage the employees in conversation and allow them to tell you about their work. Ask them what makes their organization special. For an existing supplier, thank them for the work that they do on your behalf. Make it personal. You are more than a customer number, and employees will remember a handshake and smile fondly.
- Speak with the purchasing department personnel and gain insight into their supply management process. Identify areas of risk and identification of critical path suppliers, your tier 2 suppliers. Discuss opportunities to work together to lessen the risk.
- Check out the employee break areas and restrooms. Their condition reflects how a company values its employees.
On your way out
- Debrief the members of the visiting team and document your visit. Send a written, not digital, thank you note to company management to share with their workers. Be a good customer, one the supplier is proud to have.
On-site visits show you are serious about the supplier’s performance. Few companies make the financial and time commitment to regularly visit existing suppliers and investigate new ones. Those that incorporate onsite supplier selection and performance monitoring stand out in a crowd of other demanding customers.
Site visits to suppliers can be expensive in travel costs and time away from the office. Senior management may resist travel approval because of budget constraints and unfamiliarity with the importance of the visit. If this is the case, supply managers need to utilize their value analysis tools to convince management to authorize the trip.
In fact, supplier visits are often cost reduction opportunities. A visit to a new supplier allows for an almost instant qualification, lowering the early stage hurdles that appear in any new business relationship. If the supplier has a clear understanding of the business and technical requirements early in the relationship, ramp-ups can be smoother and less costly.
Visiting poor performing suppliers can help them get back on track. On-site visits can identify technical, manufacturing and administrative gaps that need to be solved. This would reduce costly material shortages, quality related rejections and order processing and tracking issues.
Visits to well-performing suppliers keep the momentum going and reinforce the positive relationship. They are also a good opportunity to identify and address potential risk issues and discuss additional business opportunities.
This story was first published in our weekly newsletter, Supply Chain Dive: Procurement. Sign up here.