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| November 2006 |
Vendor Development |
Quality Sourcing Solutions
I'm just beginning my global sourcing process, do I really need to think about vendor development? Can't I just find a vendor that meets my requirements? The answers are yes, you should think about vendor development right away. You may find a vendor that meets your requirements, but it's unlikely that you will be comfortable with the risk until you make at least some improvements. In order to enjoy the cost savings available in China, you must be willing to make some investment.
In order to understand the importance of vendor development, it is necessary to think about risk - and what we should do about it. Risk is about variability. In quality, we think about process variability that leads to defective parts (similarly price volatility, or variability, leads to risk in the market). The Project Management Institute's PMBOK teaches us that there are several ways we can deal with risk: 1) Avoid it - change your plan so you don't encounter it; 2) Transfer it, as with insurance; 3) Mitigate it, buy reducing variability, adding redundancy, etc.; or 4) Accept it. Whether you hire third-party experts to develop your vendor, perform in-process or finished-goods inspections, or you choose to perform these services yourself, you are choosing to mitigate risk. |
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Identifying Weaknesses
What you will develop with any particular vendor is really a question of your product requirements. The best place to begin is with a comprehensive supplier audit. By examining all of your suppliers' capabilities and weaknesses, you will be able to select those areas that require work. See the October 2006 "Critical Steps in a Global Sourcing Project" article for more information about supplier audits.
It is important to note that you shouldn't expect all of your suppliers to be ISO 9001 certified. In fact, there are suppliers in China claiming ISO 9001:2000 certification that could never actually pass an audit of any kind. You should expect a supplier to meet your requirements with an acceptable level of risk. An audit should be thorough, not with an eye to develop all weaknesses, but to identify those key areas of risk for your business. |
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Common Areas of Concern
The staff of Quality Sourcing Solutions has found some areas that commonly need development. This is certainly not a complete list, just some things to think about as you visit vendors and discuss your requirements.
- Gauging and gauging calibration. It is very common in China to find vendors working without gauges, or with gauges so worn and damaged that they can't possibly work. It is also common to find gauges that have not been calibrated in years. Indeed, many gauges purchased new in China will not pass calibration, especially if they are uncommon, e.g., Whitworth form thread gauges. This is
usually easy to spot. Look for calibration marks on gauges you find in the workshop. Ask about calibration intervals and ask to see records.
- Segregation of non-complying material. Rejected parts must be separated from good parts. Look for reject bins, usually red-colored, near machine tools and inspection areas. Many vendors will do a good job of catching rejects, only to have them get mixed right back in with good parts.
- Material identification. Raw stock must be identified and labeled, and relevant material certifications must be filed so they can be easily associated with the material. Many incoming material areas are a jumble of deliveries, with similar looking stock piled randomly.
Conclusion
The above list is by no means comprehensive. For a more thorough list, please contact Quality Sourcing Solutions at info@go-qss.com and request a copy of our supplier audit form.
Vendor development is something you will likely do. You should be prepared for the possibility, and at a minimum, be able to identify vendor weaknesses so you can better quantify your risk. For more information about Quality Sourcing Solutions, or about global sourcing in general, please visit us at www.go-qss.com. |
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