We need to review the Order Book – what is the state of the supplier’s order book?   Unfortunately, the answer to this question requires some interpretation. If the supplier’s order book is full, it means, on the one hand, that many customers have faith in the supplier and have awarded many contracts to them. This is a good ‘pointer’ to the supplier being effective. On the other hand, a full order book may mean that the supplier, realistically, will be unable to meet buyer’s requirements

Operational Statistics – does the supplier have statistics that provide evidence of such issues as quality problems or service level expressed as a percentage? If the supplier is ISO 9000 accredited, evidence should be available. Credible suppliers that are not accredited should be able to provide evidence of their past performance. It should be remembered that, just because a supplier has been proficient for customers in the past, there is no guarantee that they will be equally good in future.

Capacity – what is the total capacity of the supplier’s resources? If a contract is awarded do they have sufficient capacity to meet our requirements, now and into the future?

Forecasts – what future business does the supplier forecast that it is likely to obtain? If this is substantial it might be a sign of confidence, but how and where will the supplier be able to fit in the buyer’s business in this event?

Administrative Resources – Does the supplier have the necessary systems and procedures to support good quality and high levels of service?

An example is an efficient sales order processing system so that the buyer can be confident that orders will be processed efficiently and effectively. Another would be an efficient production control system so that, once the order has been processed, the buyer knows that it will be possible to track its progress through the supplier’s production process. A good expediting system may be linked to this to enable buyers’ queries regarding the progress of their orders to be dealt with smoothly and efficiently.

Site Visit – for many buyers this is the most effective means of evaluating potential suppliers. A site visit can tell the buyer much about how the supplier conducts their business in general, as well as about their capacity. For example, claims that a supplier may make about having capacity all used up are difficult to support if it is obvious that the supplier’s premises are virtually empty of raw material with few obvious signs of work taking place. A site visit is a good opportunity for the buyer to challenge the supplier as to aspects of quotations that are not clear or that do not appear to make sense. Site visits are also useful, in a general sense, because they allow the buyer to learn about industrial processes and systems. This information adds to the buyer’s general experience/ knowledge.