Mastering Supplier Visits: A Guide for Purchasing buyers



 As a purchasing buyer, finding a competitive supplier is crucial. Traditionally, suppliers are evaluated based on quality, delivery, and price, but recently, factors like environmental management and financial health have also become significant. So, what should you check when visiting a supplier for the first time? Beyond factory tours and presentations, here are some key tips to assess the true competitiveness of a supplier.

Scouting the Scene: Location and Environment Matters

Before visiting the supplier, start with some basic research. It’s important to determine whether the supplier is located in an urban area or on the outskirts. This information helps understand logistics accessibility and the skill level of the workforce. Also, assess the surrounding industries to determine if the supplier's products can be produced with general technology or if specialized skills are needed, along with whether the local industry supports such technology. Poor accessibility could mean risks in timely deliveries, and a limited labor pool might pose challenges in maintaining high technical standards.

First Impressions Matter: Clean Parking Lots and Restrooms

The first thing that stands out during a visit is the state of the factory entrance and parking lot. This isn’t just about appearances—cleanliness reflects factory management levels and the employees' work environment consciousness. If the parking lot is cluttered or littered, the inside of the factory is likely to be the same. Make sure to visit the restroom too—a clean restroom indicates that management cares about employee welfare and the environment. This ties in closely with the concept of 3R 5S, commonly emphasized in production environments. If an unconscious habit impacts the factory's quality, what would you do? This attention to detail is crucial for a supplier’s growth and quality awareness.

Quality Control: Managing Defective Products

The quality control system for defective products is a critical aspect of evaluating suppliers. No matter how clean the factory or how well processes are carried out, if defective products aren’t properly managed, quality issues will inevitably arise. When visiting, check how defective products are managed, whether there is a designated area for defective or unidentified products, and whether on-site employees fully understand these procedures. This helps assess the supplier’s problem-solving capabilities in future transactions.

Labor Cost and Workforce Structure Analysis

Another method to evaluate the price competitiveness of a supplier is by analyzing labor costs and the factory’s workforce structure. It is essential to check the ratio of direct to indirect labor. Confirming this ratio allows you to roughly estimate direct labor costs in the cost structure. Start by checking the hourly wage at nearby fast-food places like McDonald's or Walmart. Factories generally pay around $2 more per hour than these service jobs. For example, if the McDonald's wage is $17, the factory wage would be approximately $19. Using this information, consider the indirect labor rate and benefit costs to estimate the overall labor cost structure. This method can help you evaluate labor cost competitiveness.

Factory Investment Costs: Understanding the Numbers

Investment costs in factory facilities are also important evaluation factors. Some suppliers may not be transparent about this information, but if possible, it’s important to ask. Knowing the factory area, equipment scale, and depreciation costs helps estimate the supplier’s fixed cost burden. Typically, buildings are depreciated over 30 years, and equipment over 10 years. Using this information, you can calculate the annual equipment costs.

Expert Insight: Peter Drucker's Management Wisdom

A valuable expert insight for this evaluation process comes from Peter Drucker, often considered the father of management. Drucker once said, "What gets measured gets managed." The same principle applies when evaluating a supplier’s competitiveness. Rather than relying on uncertain impressions, judgments must be made through specific metrics and observations. Careful measurement of factors such as cleanliness, defect management, labor costs, and facility investment can significantly help in assessing a supplier's true competitiveness.

What aspects do you focus on when visiting a supplier? Try applying some of these tips today, and they will surely help you discover the true competitive edge of your suppliers.

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