Three Things to Evaluate When Visiting a Supplier
Written by Jenna McDermott, Sr. Manager - Operations & Supply Chain
In addition to designing the software and the hardware for AI systems, Shield AI is also responsible for producing the hardware in our systems. To build our robots, we have established and cultivated relationships with suppliers from whom we source the materials. An essential step in our sourcing process is to conduct onsite assessments at suppliers. These on-site visits are a crucial part of the manufacturing process because they allow us to develop a full understanding of who we are entrusting to create a portion of our products.
In supplier selection, similar to interviewing a job candidate, the work you invest upfront to evaluate the candidate pays off in only extending offers to those who are the right fit for the role and for your team. Because Shield AI seeks to uphold the highest standards, we engage in a thorough supplier selection process to ensure we only work with suppliers who are equally committed to excellence.
While we always consider a supplier’s technical ability, pricing, and lead times before awarding work, we also evaluate the company’s process maturity and culture. Although these items can seem hard to quantify, we have found them to be effective indicators of successful supplier partnerships. In particular, the following three questions are consistently considered to assess suppliers, regardless of what a supplier manufacturers.
1.) Is it a metric-driven business?
One of Shield AI’s core values is to work hard and uphold the highest standards; we look for this same value when evaluating suppliers. Reviewing what metrics a supplier has in place and how they are performing against them is a sound method of determining if a company is equally committed to excellence and to relentlessly improving. Manufacturing plants which monitor their key business processes and operations with metrics are able to respond to issues rapidly and are able to determine the effectiveness of their actions.
How to find out: During the onsite tour, look for dashboards and charts posted around the facility. Common production metrics include; quality defects, process yield, on time delivery, on time starts, and machine downtime.
What to look for: Regardless of what metrics are being monitored, they should all be associated with a goal. Look for performance targets that seek to raise the standard. For instance, I once was at a supplier who set their quality goal as 95% of their products being defect free per month. As a potential customer, I was stunned to think they would aspire to such a low standard. The supplier we ultimately chose to work with had internal targets of defect-free shipments for six months straight.
2.) Are they continuously monitoring capacity?
Factories should be using customers’ orders and forecasts to plan the availability of their machines and labor against current and future demand. Doing so enables them to make decisions based on fact, and prevents them from over-committing to production schedules.
How to find out: Ask to see the latest capacity models for the machines and processes related to your quoted work package.
What to look for: Capacity models for machines should factor in planned downtime for maintenance. They should also factor in throughput yield. Labor capacity should factor in planned time off, such as holidays. Ask about process bottlenecks and how demand is forecasted. One way to quickly identify bottlenecks is by looking out for piles of inventory in the production line. When an input comes in faster than the throughput speed of the next process, parts will start accumulating.
3.) Does the business learn from mistakes?
Every company will encounter problems; the variable is how the team reacts to and resolves issues as they arise. We want to work with suppliers who approach problems with rigor, and which address issues quickly.
How to find out: Ask what the company’s worst quality issue was in the last 12 months or if they have had any recent product recalls.
What to Look for: The best responses from suppliers are candid and direct. The leadership team should embrace opportunities to improve and quickly take meaningful action to address the issue at hand. I also recommend watching how the team reacts to the question. Are they defensive and emotional? Or, do they handle themselves with grace and demonstrate a fact-driven approach? Their response is a strong indication of how they will react to future supply disruptions and quality escapes. One of the suppliers I worked with in a previous role had an abysmal quality track record. In a year’s time up to 8% of the product sent to our facility had quality issues. However, their leadership team’s ability to have a direct conversation about the numbers, and their openness to new ways of addressing the issues at hand, created an environment where we were able to improve their product quality to fewer than 0.05% defects per year.