1.) Is it a metric-driven business?
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.
