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10 Things Your Suppliers Don’t Want You to Ask - But You Need to Know

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Charles Dauber

During COVID-19, supply chain teams are facing unprecedented change and insight into the operations and controls of suppliers can be a daunting task. Existing suppliers are changing the way they operate and prioritize, and new suppliers are being rapidly on-boarded to help plug supply chain gaps, often causing due diligence to fall by the wayside. What are the right questions to ask current and new suppliers? 

In today’s business climate it’s all about delivering the right material on schedule with the right level of quality and the right cost, which requires understanding your supply chain and its risks. Beyond trusting that key suppliers have always successfully supported your organization, proactively reaching out to critical suppliers to understand how they are adapting operations can provide the insight needed to make key decisions. Here are the top questions you must get answers to assure successful operations continue. 

Questions to Ask Suppliers 

  1. Are there any financial issues at your company that could impact your ability to deliver what we need when we need it? Many organizations rely on D&B or quarterly financial reports to monitor a supplier’s financial risk. However, these data sources are historically focused and may be out of date without you knowing it.  Asking suppliers for updated financial information is the underlying foundation for their ability to deliver for you. 
  2. What is the status of your workforce? Suppliers and subcontractor's ability to support your requirements is dependent on their workforce and understanding what percentage of their workforce is out due to COVID-19 (in quarantine, state/local/federal work restriction, etc.). This should be updated on a weekly basis. 
  3. Do you have enough of the right inventory to deliver what we ordered on schedule? Many suppliers have recently reduced inventory levels, either based on supply chain issues, or because they are trying to reduce cash tied up in inventory. Understanding your suppliers inventory levels and changes gives you visibility into a crucial element of their production schedule and risk. 
  4. Who are your key suppliers and what are your key supply chain risks? Just like you rely on your key suppliers, your suppliers also have suppliers that they rely on (your 2nd Tier suppliers). There are 100s of stories of companies that believe they are successfully managing their supply chain, only to find out their key suppliers have key suppliers in China that are unable to deliver, causing an impact through their entire supply chain. Getting visibility from your suppliers of their key suppliers, including geographic risk (e.g., overseas suppliers) and possible sole-sourcing concerns are all critical for minimizing supply chain disruption risk. 
  5. How has your quality performance been recently for the items we are purchasing from you? It’s one thing for a supplier to say they have ISO 9001 or another quality system. It's more important to understand how they deliver quality to understand risks of receiving defective parts or materials. Its reasonable to ask suppliers to provide recent quality metrics under non-disclosure, and depending on the criticality of what you’ve purchased from them, to reduce your risks. They should also be able to share their quality control procedures for your materials or parts and their KPIs for those. 
  6. Is my order still on schedule and have there been any changes to your standard lead times I need to understand? Even if suppliers are saying there are no changes to your order, asking about standard lead time changes can provide information about potential impact on your order status. We all know that with the pandemic things can go wrong quickly and lead times may change, but staying on top of changes will keep your supply chain running smoothly and keep you prepared.
  7. Is your organization performing safely and how can you assure your personnel are working safely at your facility and if you have to come on site to work for us? Many suppliers can provide their safety program information and their OSHA safety statistics from the most recent year. Depending on your industry, supplier safety especially when they are working onsite, is the highest risk to your organization. Many organizations have stratified their suppliers based on on-site risk, so assuring your suppliers are able to provide their safety program information, status of the personnel working on your site, and their safety certifications and training will go a long way to assuring a safe outcome for all stakeholders. 
  8. What is your Business Continuity Plan (BCP) to support any unforeseen business shutdowns and maintain customer commitments?  Understanding your key supplier's business continuity capabilities will help you to identify gaps between that capability and your requirements. Having your critical suppliers review and maintain their business continuity plans should be part of managing your overall supply chain risk. 
  9. How can you assure me that my information used by your organization is secure from a cyber-security perspective? Today’s modern hackers are using sophisticated ransomware to take over infected computers and servers, then blackmailing owners to get their data back. Understanding chain of custody and security for your information is a critical requirement for protecting your intellectual property. 
  10. How can I make sure that your organization is behaving in a manner consistent with my company’s values and beliefs (and that you won’t cause any negative news related to us)? Beyond financial and operational risk is reputational risk. Do you have visibility into your supplier’s Foreign Corrupt Practices Act adherence, child labor, conflict mineral, Environmental Social & Governance programs, RoHS and more? In addition to reducing reputational risk, today’s best suppliers should market their adherence to programs that protect their customers like you from reputational impact and share their support for Environmental programs, Supplier Diversity, and other Corporate Social Responsibility programs. 

The pandemic has brought chaos into every industry, but if you maintain open and effective communications while asking the right questions, your operational effectiveness will continue to progress in this new normal. 

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