Supplier Assessments - Site Visits and Plant Audits

Supplier Assessments: How to Get the Most Out of Site Walks & Plant Audits

The amount of commercial information available to procurement professionals is seemingly endless and, as a result, connecting it to the physical supply chain is complex. Buyers and other supply chain professionals perform a great deal of their job functions obtaining and interpreting this information from the comfort of a desk, making supplier or plant audits seem like nothing more than a field trip or an excuse to get out of the office. This attitude is forgiven though, considering the wealth of data that can be gathered from web searches or a few email exchanges.

However, visiting suppliers is, for a variety of reasons, still a core part of the purchasing and supply chain profession. For instance, just because a company has a clean website doesn’t mean they have a clean facility. The opposite may also be true, where a company with a dated website may actually have world-class quality systems in place. This is why assessing a supplier’s commitment to quality and understanding their work environment can only be found by visiting them on premises.

Technology continues to disrupt business processes across the globe, but regardless, taking the time to visit supplier locations is still a critical task that will yield valuable results when conducted properly.

 

Preparation

Know the Purpose

Performing a site walk or plant audit should identify two things: the relationship with the supplier and the purpose of the visit.

It may seem obvious, but framing the visit in these simple terms prevents scope creep and ensures the team asks the appropriate questions to help progress toward a valuable conclusion.

Also, visiting an existing supplier to assess quality is different than visiting an internal site for corrective action. One way to better understand the purpose for your site visit is to identify whether your team is there to learn, evaluate, or teach. To aid with this determination, use the guidelines below:

  • To Learn: Visiting a prospective supplier to learn about a new technology or manufacturing processes that fit into supply chain operations
  • To Teach: Launching a lean initiative, your team will be dispatched to implement a new process at a distribution center
  • To Evaluate: Evaluating bids for new or existing businesses and their capacities, cultures, and quality supplier operations

Bring A Cross-Functional Team

A team of four buyers sent to observe supplier operations will come away with four conclusions viewed through a buyer’s lens. A team of engineering, sales, purchasing and supply chain professionals comes away with a more diverse set of observations, and therefore a more valuable site-walk experience. Involving leadership from multiple departments is a great silo-breaking activity and a simple strategy for achieving the desired outcome of a site visit.

Develop the Right Tools

Developing a site-walk template or checklist is another cross-functional activity that has benefits beyond just the site walk itself. This allows multiple stakeholders to come to agreement on what the priorities are when conducting the visit, and what qualities suppliers should have to participate in the supply chain.

Your team should have a unique template tailored to the mission and values of the organization the site walk is being performed for. Despite the varying approaches to these audits, common objectives include understanding:

  • Quality Systems
  • Leadership & Workplace Culture
  • Measuring & Testing Processes & Equipment
  • Process Control
  • Purchasing & Inventory Control

Purchasing managers and buyers looking to develop an outstanding supply chain should administer site visits with an inquisitive mindset, asking themselves questions about suppliers, like:

  • Do they manage inventory well?
  • Are the processes controlled and is the flow of materials efficient?
  • Does the culture on the floor align with the culture in the boardroom?

 

Execution

Start at the Beginning

It’s an attractive option to review the finished product and ask questions, but a far more valuable use of time is to start where the material flow does. Observing the flow of goods throughout a plant gives the your team a sense of the inventory control and materials management systems employed by the supplier.

Listen, Observe, & Ask Questions

A site walk is an interview with a supplier as much as it is a tour of their facilities, and being a good listener is paramount to interviewing effectively. Asking the best questions is equal parts listening and planning, as each ensures the questions asked weren’t already addressed or easily discoverable on the company’s website.

Visual management cues are easy to spot and should be noted on the site walk. Charts and performance data, production schedules, workstation labels and instructions, and safety markings on the floor are all important pieces of this, and their presence (or lack thereof) is an important indicator of the supplier’s commitment to productivity and quality.

Don’t be afraid to bring your observations to light with the supplier (at the appropriate time). Suppliers may not hold sensitive information as “close-to-the-vest” as one may be led to believe, and may be refreshingly open about their challenges. Sometimes their revealing of an action plan to fix a known issue can tell you more about a supplier than the original quality issue could.

Talk to Everyone

When appropriate, asking to speak with employees on the production floor is a great way to learn more about the supplier. Those closest to the product are usually more open about their daily tasks and workplace environment, and can paint a picture of what the supplier is like without the “sales” speak. Taking the time to communicate with those doing the work is a great way to break up the predetermined travel path set by the supplier and may uncover valuable information about how the products at the end of the line make it there.

Review Notes & Summarize

Whether it’s immediately after a site walk, or within a week of it, setting up time to review notes with your greater team is crucial to extracting value from the auditing exercise. Conversely, if your team members simply returned to their desks without discussion, the information becomes siloed and inaccessible, rendering the visits useless.

When reviewing notes, identifying patterns and processes instead of results is far more productive. Variation is the enemy of quality products, and a supplier’s processes will indicate whether the products they sell are reliable and improving.

Looking for patterns is also a great way to cut out the noise. A single tool out of place could be an isolated incident, but a series of tools out of place could signal a breakdown. Make sure these patterns are summarized in an agreed upon format, like an executive summary or even the checklist itself. This will ensure that the notes taken by your cross-functional team are included in the supplier selection process.

 

Conclusion

A successful site walk is an invaluable tool for purchasing professionals and is the direct result of its thorough preparation and consistent data collection and analysis methods. We hope this blog post provides you with actionable insight for improving your organization’s supplier assessment and selection practices to increase the efficiency of, and optimize, your supply chain operations.

-Justin