For the business of importing from China, choosing the right supplier is the most important thing you need to focus at beginning. A right supplier will not only produce the products at a competitive price, but also provide good service on the supply chain.
In order to verify and select the right supplier, it is recommended to do factory audit, as there are many advantages.
1. Amplifies Performance Visibility
When companies don’t know the facts about how their suppliers are performing, factory audit tends to be based on guesses. Additionally, the simple act of measuring performance can help improve performance. This improvement can be even more dramatic when companies award additional business on the basis on suppliers meeting performance goals.
2. Uncovers Hidden Cost in Supply Chain
The supply chain is full of potential risks that can originate from suppliers in regard to corporate social responsibility. Some of these risks can be avoided by better communications between customers and suppliers. By better understanding supplier performance and supplier business practices and processes, customers can help suppliers drive waste and inefficiency out of the business, resulting in higher-quality suppliers and lower costs.
3. Leverages Supply Base
By conducting effective factory audit, an enterprise can set a threshold for its suppliers that can lead to higher-quality results. Companies can better plan new products and services based on a good understanding of its suppliers’ capabilities and performance levels.
4. Aligns Business Practices
Ideally, suppliers should run their business in alignment with their customers; share the same business ethics, expect similar standards of excellence, show commitment to corporate social responsibility and continues improvement.
5. Mitigates Risks
Insight into supplier performance and business practices helps reduce business risk, particularly given companies’ increasing dependence on its key suppliers. Risks can be financial and operational and increase with geographic distance.
6. Improves Supplier Performance
The goal of factory audit should be supplier performance improvement. While simply measuring performance has a positive effect, factory audit can be most effective when it leads to continuous improvement activities and actual supplier performance improvement. Follow-up activities, such as supplier training and development, and corrective actions to address factory audit findings are the best ways to obtain measurable and positive results.
