We know manufacturing consultants who can take one lap around a plant floor and write up a very reliable assessment of the strengths and weaknesses of the company that operates the plant. If you have some of that same ability, you likely use it to make your own company succeed. So, are you putting any of that scrutiny on your suppliers?

In these times of tight budgets, reduced staff and banned travel, it’s easy to dismiss supplier visits as a discretionary expenditure, but nothing can be further from the truth. And it’s as true for a small company as it is for a global one. Perhaps even more so since smaller companies tend to outsource more.

To make a supplier visit pay off, it is necessary to plan an agenda for the visit and a detailed set of questions or areas of inquiry, so the supplier can be well prepared. A walk around the plant floor is a good start. It may reveal low utilization of capacity, low stocks of raw materials and work-in-progress, low levels of inventories and outages of stock. These observations can be symptoms of bigger problems. 

It is also necessary to have a detailed discussion mapping the supplier’s own supply chain and the vulnerabilities the supplier has identified in it. Many suppliers will focus on their immediate vendors and nothing below. Your supplier should provide detailed steps it is prepared to take in the event of a disruption anywhere in its own supply chain. 

It is also fair to ask your most strategic suppliers to open some of their financial records to you. There is little doubt that when end customers are stretching payment terms to 120 days or more, the weaker links in the beginning of the supply chain will struggle to finance their working capital. Those may be small businesses, not well capitalized and verging on bankruptcy.

Every visit to a supplier should include an assessment of quality. When cash is short and losses loom, it should not surprise anyone if suppliers start to cut corners that degrade product quality or reliability.

If you consider your suppliers as extensions of your own business, you will come to expect them to bring you innovation and continuous improvements. Those may be hard to come by as R&D budgets have suffered. Your approach and the help you offer during a supplier visit may determine if your relationship is one they want to support.

Suppliers will respond better to those customers with whom they have strong relationships. This is especially true for low-cost-country sources. Your most critical strategic suppliers need attention, monitoring and compliance.

As we move forward in evolving supply chains, the leanest, most viable and integrated supply chains will offer competitive advantage. These are not built without considerable effort, and supplier visits are an essential part of the process.

Bill Michels is CEO of ADR North America LLC, Ann Arbor, Michigan, a consulting firm specializing in global supply chain management.