Sourcing Expert Series 02: Suppliers Due Diligence

In the first article of the Sourcing Expert Series, we explained why cost shouldn’t be the only consideration in sourcing. Now, let’s take a deep dive into quality. Quality could be discussed from two perspectives: Product Quality and Supplier Quality. Due to the length limit, we will focus on Supplier Quality here, and how to assess/manage them.

Supplier quality refers to a supplier’s ability to provide products or services that suit the needs of its consumers[1]. Having a good framework in supplier management can not only earn you a stable supply of reliable, quality products but also maximize your operational efficiency. To help you form a solid framework (or review your current one), here is what our key stakeholders were considering when they entered the very first partnership with ZONBIX:

  1. Reputation

Branding is all about consistency. If a supplier managed to keep a good reputation in the past – you can expect at least a consistent behavior from the company to maintain the hard-earned reputation. Even when things go wrong, companies with solid branding will be much more willing to take the blame, try their best to make things right, and compensate for your loss. A company with a solid reputation tends to go further than only providing good products, they will also offer their clients the best customer service they could. In fact, this is how ZONBIX excelled at the competition and won many decade-long projects.

  1. Track Records

A company with a long history of customer satisfaction not only demonstrates its consistent quality in products and services, but also indicates its ability to meet or exceed customers’ expectations. Do you see your potential partner doing business with big players? That’s a plus – suppliers with big corporations in their portfolio normally will not let you down.
A supplier's geographical focus may also offer an educated guess. For example, one must be above par in many ways to win business from clients from North America, EU, and Japan, where the respective laws/regulations and business environments result in stringent quality requirements (recalls, high consumer expectations, etc.) and heavily penalize wrongful sources of materials (conflict materials, child labor abuse, etc.).

  1. Certificates

When it comes to professional production, standardization is required for various reasons to build a stable and reliable business environment. There are many institutions founded for this purpose, such as international organizations International Organization for Standardization (ISO) and International Automotive Task Force (IATF). The system works in your favor when choosing a supplier.
Firstly, a company must be tested against a set of carefully designed criteria to possibly certify itself to reputable standards. Secondly, many standards will be updated every few years based on the changes in the business environment, and companies may require significant investments (and that shows the determination of their management) to get certified again to the latest version. For example, when ZONBIX was transitioning from ISO 9001:2008 to ISO 9001:2015, the company underwent a systematic update from ERP software to optimization of workflows and processes – which eventually benefit its customers with enhanced quality and stability in all areas.
Apart from checking whether your potential partner holds certificates of globally recognized standards such as ISO 9001, you could also consider hiring a third-party investigator to cross-check the authenticity of the certificates.

  1. Professionalism & Communication

Communication is the key to good cooperation. Imagine if your supplier does not have professionals that could understand the required specs you sent them; would you rank them as a good quality supplier? Requesting quotes is a very practical way of assessing your potential partner. Those who fail to communicate timely and clearly during the quotation stage are also unlikely to do any better when working on a formal order. In the engineering domains, it would be wise to also test your supplier’s ability to communicate with drawings and professional languages.
During the COVID-19 pandemic, ZONBIX managed to secure a few new deals. The secret? We responded to all our customers promptly, which not only successfully built the initial trust, but also gave customers peace of mind about the business environment in Taiwan! 

  1. Don’t Be Shy to Ask

Sourcing is a big topic and very industry-specific. However, the goal remains the same – lower the risk before walking into a transaction. If there is anything that can help you achieve this, simply ask your supplier for it! For example, ZONBIX and its partner network are particularly strong in custom/drawing parts; thus, most of the time, there will be no ready samples. However, after understanding what specs are critical for our client’s use, Team ZONBIX can always try to find something similar enough to serve the evaluation purpose. In fact, we offered this many times to our customers. Although not exactly the same, our customers were very happy to have something handy to test, and to “wow” their key stakeholders with ZONBIX’s exceptional quality.

We hope this article adds value to your sourcing tasks. Please feel free to send us an email and our specialized teammates are ready to answer inquiries. In our upcoming Sourcing Expert Series, Team ZONBIX will be presenting more information, such as the importance of product quality, global sourcing issues, and many more! Stay tuned by following ZONBIX on LinkedIn!


[1] Source: What is Supplier Quality Management? Supplier Selection Criteria | ASQ