How to Evaluate Supplier Quality and Questions to Ask When Choosing Your Suppliers
This article offers advice on evaluating supplier quality, warning signs that should raise red flags, and questions to ask when choosing suppliers.
We exist in a globalized environment where supply chains span the entire world, which increases the importance of evaluating our supply chain risks and establishing processes and systems to evaluate and monitor those risks. Historically, more than 80% of the Original Equipment Manufacturer’s problems evolved from supply chain quality or delivery issues. The pandemic has opened up the awareness to the delivery impacts and variables, but quality concerns still remain, and can be just as devastating.
Is your supplier ISO 9001 certified or ISO 9001 compliant?
Perhaps this is a question your company should be asking of its suppliers. Companies like Disney are now requiring that their suppliers be ISO 9001 certified. Aerospace and automotive companies have already been recommending or requiring ISO 9001, or other industry certifications for their suppliers. Why is this so important? Because it indicates your supplier has established a systematic approach to quality management and is managing its business to ensure that your requirements are clearly understood, agreed upon and fulfilled. In these times of economic uncertainty and global supply chain disruption, your suppliers play a critical role in your business’ success and sustainability. ISO 9001 certification of the supply chain reduces risks for quality and delivery disruptions. Ensuring the same set of standards across the supply chain will also ensure consistency across QMS requirements, industry standards and regulation.
How well do you know your suppliers and the dynamics of your supply chain?
According to the 2021 Drishti survey of 400 senior manufacturing leaders, when identifying the top external threats to their organization, 45% indicated supplier price increases, and 42% supply chain disruptions. Have you conducted a full risk assessment for your entire supply chain, including contractors, sub-contractors, and suppliers? Based on risks, do you require ISO 9001 certification or compliance from key suppliers? By identifying your risks, threats, strengths, weaknesses and opportunities, you can develop strategies to mitigate the risks and act on the opportunities. Your relationship with your suppliers is ever evolving so the risk assessment process is a key factor in how well a company remains resilient to ever changing risks. In these challenging economic times, even customers and end users are more aware than ever of the supply chain dynamic as the impact of shortages and higher costs reaches them. How do you manage their expectations?
The International Organization for Standardization (ISO) suggests that you consider these questions for your supply chain:
- What are the risks to your business if you experience problems with the product or service?
- How can you be sure that the product or service will actually meet your requirements?
- What do you know about the reputation and historical performance of the supplier?
- What level of confidence do you have in your supplier’s ability to provide you with conforming products or services on a consistent basis?
- If conformity to ISO 9001 is important (based on your risk assessment), how can you be sure that your supplier has a QMS that meets ISO 9001 requirements?
Demonstrating conformity to ISO 9001 can be met in several ways depending on your requirements. They can become certified through a certification body, or your company can perform a second-party audit, or sometimes it is more effective to bring in an outside auditing firm (like simpleQuE) to assess the supplier’s compliance.
Supplier audits should answer these questions about the quality management system:
- What quality methodologies do they utilize?
- How is the supplier monitoring its quality?
- How is the suplier monitoring delivery performance?
- How is their quality performance?
- How is their delivery performance?
- Are the metrics improving, declining, static or even erratic?
- Are they complying with QMS requirements, industry standards and regulations?
- How do they track lots and track non-conforming materials etc.?
- What is the sampling and inspection procedure?
- What happens when a defect is discovered?
- How is rework controlled, along with any backup or alternate production methods?
- How do they identify and manage risk in the quality, manufacturing, engineering change and shipping processes?
Warning signs when supplier issues occur
Based on the automotive and aerospace expertise from SimpleQuE, here are some additional questions regarding your supply chain which should help elevate scrutiny for quality system and supply chain risks which should be mitigated.
- Has there been one or more supplier quality issues that caused a significant problem to the customer?
- Has a recall occurred due to a supplier issue?
- Are there high warranty claims due to a supplier issue?
- Has a supplier closed with minimal or no notice?
- Are you experiencing supplier delivery disruptions?
- Has a supplier issue damaged your name brand and reputation?
BSI’s Supply Chain Risk Insights Report (November 2021) stresses that you also conduct proper due diligence when bringing on new suppliers. David Fairnie, Principal Consultant, Supply Chain Security at BSI recommends that new suppliers go through a process or onboarding to confirm what services or products they’re providing and what capability and capacity they have. Then continuously monitor the supply chain and work with your quality group to audit your suppliers, particularly their resilience capabilities.
Along with the audits, conduct regular performance reviews and physically visit their facilities to evaluate warning signs such as:
- Request for cost increases
- Request for advanced payments on tooling
- Request for payment term adjustments
- Customer concentration for adequate prioritization for your business
- Significant volume change or re-sourcing by other customers (new business from other customers)
- Idle machines or equipment or lack of equipment maintenance
- Change in management or control
- Specific supplier industry problems
- Complaints from other customers in their corrective action process and records
Know your supplier, assess, then trust
If you don’t have the time or resources to monitor and audit your suppliers, simpleQuE can help.
Our supplier quality audits go beyond ISO 9001 to consider additional supply chain, regulatory and customer impact risks, such as:
- Regulatory compliance
- Good Manufacturing Practices (GMP)
- Customer specific requirements awareness and compliance to the functions
- Sub-tier supplier risk management systems
- Change control process and effectiveness
- Deviations from the part or process, and the controls for backup methods or alternate processing
When it comes to your relationship with suppliers, simpleQuE’s supply chain audits can provide a number of services:
- Problematic supplier assessments
- Supplier risk assessment
- Sourcing evaluations
- Ongoing supply chain strategy assessments and audits
- Corporate quality audits
- Compliance to your company’s custom requirements
- Assistance in the monitoring and closeout of corrective actions
- Improving your company’s measures of effectiveness
Supply chain audits and corrective actions will drive supplier development, and allow you to resolve both supplier quality and internal challenges faster and more effectively.
In summary, what the last two years has brought to light is the importance of being prepared and proactive in your business. Do you really know your suppliers? Are they managing risk within their own supply chain? How are they vetting their suppliers for various types of disruptions or unexpected events like shortages of raw materials or shipping delays? Identify the coming changes and regulations that could impact your supply chain. And most importantly, look for the opportunities to create competitive advantage and avoid unnecessary and costly disruption.
SimpleQuE has the auditing expertise and certified resources to offer true value to your business. We also provide effective management solutions that make ISO certification obtainable and sustainable. Contact us to discuss a customized strategy.
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