Supplier Assessment Sample Report: What You Can Expect

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SUPPLIER
ASSESSMENT
REPORT
Presented by Insight Solutions Shenzhen Limited
Supplier: HHH
Assessment date(s): 2018-04-27
Reference #: 201804257841977

Contents
Assessment Guidelines
Abbreviations
Facility Overview
Section Summary
SWOT Analysis
Supplier Engagement Suggestions
Assessment Findings
Business & Finance
Operational Capabilities
Supply Chain Management
R&D and Engineering Capabilities
Quality Management
Manufacturing
CSR
Factory Disclaimer
Conﬁden al | All rights reserved | www.insightsolu onsglobal.com page 1 of 22

Assessment Guidelines
Assessment Key Area Definitions
Plan
Documented process, defined procedures or measurements with goals and
objectives. Management involvement or organizational structure are adequately
defined to assure proper implementation.
Action
Implementation of the defined plan in critical business or operational areas.
Responsible employees understand the processes and the needs for on-going
execution.
Result Demonstration of effectiveness.
Scoring for Plan, Action or Results ("PAR") is based on the typical practices for the supplier being
assessed.
Score Questionnaire Scoring Criteria
No system or no
process in place or
information
0 When there is no acceptable evidence in all three "PAR" areas.
Major deficiency 1 When there is acceptable evidence in only one of three "PAR" areas.
Improvement
necessary
2 When there is acceptable evidence in two of three "PAR" areas.
Meet industry level 3 When there is acceptable evidence in all three "PAR" areas.
Outstanding or
exceed industry
level
4
When there is strong evidence in all three "PAR" areas exceeding industry level.
Demonstration of significant successes in product quality or customer
satisfaction as a result.
Details must be supplied.
Not applicable N/A When specific question does not apply to the particular supplier.

Abbreviations
　　　　　　　　　　　
AC: Alternating Current IQC: Incoming Quality Control
AOI: Auto Optical Inspection ISO: International Standards Organization
APQP: Advanced Product Quality Planning L/T: Lead Time
AQL: Acceptable Quality Level LCD: Liquid Crystal Display
AVL: Approved Vendor List MOQ: Minimum Order Quantity
BOM: Bill of Materials MPQ: Minimum Packaging Quantity
CAR: Corrective Action Request MRP: Materials Request Planning
Ce: Conformity with European MSA: Manufacturing Service Agreement
CM: Contract Manufacturer NCR: Non-Conformity Report
CSR: Corporate Social Responsibility NPI: New Product Introduction
DC: Direct Current NRE: Non-Recurring Engineering Cost
DFM: Design for Manufacturing OCV: Open Circuit Voltage
DVT: Design Verification Test ODM: Original Design Manufacturer
ECN: Engineering Change Notice OEM: Original Equipment Manufacturer
ECO: Engineering Change Order OQC: Outgoing Quality Control
ECT: Edge Crush Test PCB: Printed Circuit Board
EMC: Electro Magnetic Compatibility PCN: Process Change Notice
EMI: Electro Magnetic Interference PDCA: Plan Do Check Action
EMS: Electronics Manufacturing Services PU: Polyurethane
ERP: Enterprise Resources Planning PVT: Production Verification Test
ESD: Electro-Static discharge QTA: Qualified Terephthalic Acid
EVT: Engineering Verification Test RFI: Request for Information
FAI: First Article Inspection RFP: Request for Proposal
FCC: Federal Communications Commission RFQ: Request for Quotation
FG: Finished Goods ROHS: Restriction of Hazardous Substances
FIFO: First In, First Out SIP: Standard Inspection Procedure
FMEA: Failure Mode and Effect Analysis SMT: Surface Mount Technology
FPCB: Flexible Print Circuit Board SOP: Standard Operations Process
FPY: First Pass Yield SPC: Statistical Process Control
GR&R: Gauge Repeatability and Reproducibility TPM: Total Productive Maintenance
HMLV: High Mix Low Volume TQM: Total Quality Management
HSE: Health, Safe and Environment UL: Underwrites Laboratories
ICT: In-Circuit Test VAM: Value Added Margin
IP: Intellectual Property VSM: Value Stream Mapping
IPC: The Institute of Printed Circuit WI: Work Instruction
IPQC: In-Process Quality Control WIP: Work in Process

Facility Overview
Company name XX Electronics Limited
Founded in 2002
Size (sqm) 42,000
Total revenue in last
year (USD)
86 million
Export revenue in last
year (USD)
63 million
Quality certifications ISO 9001, ISO 14001, 13485
Is the company owned
by one of customer
competitors?
No
Is the company a
subsidiary of a larger
parent? If yes, what
company?
No
Type of Business Manufacturer Type of Company Joint Venture
Major Facilities
Geographic Location
Description of
Product/Service
Size (sqm)
No. of
Employees
No. of Days
Worked
Per Week
Shifts
Xiamen, Fujian province,
China
EMS for electronics
products, medical and
communications device in
particular
32,000 831 6 2
Top 3 Customers
Name Location Sales Revenue % of Total Sales Revenue
Customer A USA 15 million 17%
Customer B Japan 10 million 12%
Customer C USA 3 million 3%

Section Summary
Supplier HHH received a score of 61.89 for Pro assessment, below are details for each section.
Assessment Section Weight Score
Percentage of
Compliance
Business & Finance 20 12.50 62.5%
Operational Capabilities 10 6.00 60%
Supply Chain Management 15 9.17 61.11%
R&D and Engineering Capabilities 10 6.04 60.42%
Quality Management 20 10.00 50%
Manufacturing 20 13.89 69.44%
CSR 5 4.29 85.71%
100 61.89

SWOT Analysis
Strengths Weaknesses
Sufficient experience in electronic
products design and manufacturing.
ISO9001, ISO14001 and 13485 certified and executed.
Solid partnership with upstream suppliers.
Familiar with overseas market certification, production
and shipment requirements.
There is an ERP system in place to manage PO, delivery
and inventory.
With clear quality inspection system covering
IQC/IPQC/OQC/reliability test Lab etc.
English proficiency from GM, PM and engineers.
Plastic and metal parts are outsourced.
Insufficient capabilities to anticipate project technical
risks.
Lack of software development capabilities.
Strict in releasing credit lines to new customers.
Opportunities Threats
Strong ability and experience in phase
in new products.
Eager to develop business, willing to build long-
term relationship with new customers, great customer
service attitude.
Capacity in peak season is full, also new customer may
be de-prioritized then.
Insufficient cost transparency.
Supplier Engagement Suggestions
We recommend to contact XX Electronics Limited for RFQ/RFP to benchmark.
Verify their resources allocation plan, project team who to work with for your project, etc.
Analyze their quote and project schedule, technical proposal to validate their interets level and technical
capabilities.
Set up "Rules of engagement" to clearly define scope of work, responsibilites, deliverables and timelines, etc. and
agree with them before signing "Manufacturing Service Agreement".
Negotiate with them on the "Manufacturing Service Agreement" with well prepared negotiationstrategy, tactics
and procedures, etc.

A - Business Strategy
B - Business Health
C - Communication
D - IP Protection
E - Finance
Business & Finance
Observations Score
Business Strategy - 2.5
● The company has a clear business objectives for 3 years starting in year 2017, but the goals are not
seriously executed: the annual revenue growth target is 15% and result is around 8%, no further actions
have been taken.
2
● The company is focusing on medical and communications projects, no special concern on customer
location, size, etc. All resources are shared for different projects, each staff may be in charge of 3-5
projects.
3
Business Health - 2.67
● The company is ISO 9001, 14001 and 13485 certified. 3
● Average revenue growth percentage in the past 3 years is 10%, besides long-term & stable customers,
they also seek project opportunities through sales agencies in US.
2
● The top 5 customers have engaged with the company for more than 7 years, 2 of them even last for 12
years.
3
Communication - 2.67
● Once project starts, customer can communicate with each functional team directly. 3
● For new project introduction, there is a Customer Focus Team (CFT) led by PM once project kickoff,
although these resources are all shared (one person in charge of multiple projects).
2
● The General Manager is responsible for all key accounts and has sufficient English skills to handle
overseas customers.
3
IP Protection - 3
● There is an official policy to protect customer IP, after signing NDA (both with employees and customer),
there will be a separate cloud storage with access control, customer project will be given a code name for
communication.
3
Finance - 2

● The company is strict in releasing payment term to new customers, the regular practice is 30% prepay and
70% payment upon shipment, unless there are strong financial records/brand recognition, in which case a
few docs may be required for verification.
2
● Normally after 18 months cooperation, customer can get net 30/45 days payment term. 2
● For cost breakdown, if customer owns design and IP, it's doable; otherwise they are reluctant to do so. 2
Supporting photos
Industry certificate (e.g. IS013485, TS16949, ISO9000) IP protection policy

A - Facility Management
B - Resources Allocation
C - Demand Management
Operational Capabilities
Observations Score
Facility Management - 2.67
● There is a facility recovery plan, in case of force majeure. Records show the drill practice has been done
once per year.
3
● The company has e-access system in the zone, and security staff in the front of each gate. For R&D center
and testing lab, there is extra control, open to authorized personal only.
3
● Based on interview there is a annual goal for each function, however, there aren't any records. Also only
manager understands the goal, junior staff are not quite clear.
2
Resources Allocation - 2.33
● A local ERP system Yongyou (one of the biggest in China) is used for enterprise resources management,
though it covers Purchasing, Warehouse and Finance functions only, manual work are still largely
required.
2
● An equipment list is maintained on a quarterly basis, it's all about SMT, assembly and testing equipment,
other parts and process are outsourced.
3
● The turnover rate in the past 3 years are relatively low - 3%, mainly because almost 60% of the employees
are local residents.
2
Demand Management - 2.25
● Currently the line utilization rate is around 65-70%, no figure projection in the coming year, Sales claimed
that capacity will be used up in the following months as July to Sep is their peak season.
2
● The company bought the existing building for office and workshop, there isn't any plan to move to other
places in the next 2 years.
3
● The company is more capable in managing high volume/low mix projects, although they also have
experience in serving startups with low volume.
2
● For hot season demand, the company will add production shifts and also hire temporary staff to fulfill
needs. there is a HR agency to support urgent resources request, usually 50-100 temporary staff are hired
depending on production requirements.
2

Supporting photos
ERP system Equipment list

A - Materials Management
B - Supplier Selection
C - Supplier Management
D - Logistics
E - Cost Reduction
Supply Chain Management
Observations Score
Materials Management - 2.5
● The existing ERP system Yongyou can place order, record delivery and manage inventory, for materials
planning or MRP it's not allowed.
2
● The company conducts project materials status review on a monthly basis and update to customer
accordingly. If there are excess or obsolete materials, the company can transfer, re-sell or dispose on
customer's behalf, then share profits with customer.
3
Supplier Selection - 2
● There is a supplier selection process in place, suppliers will be evaluated in 3 areas (quality 50%,
engineering 30% and sourcing 20%), however, there aren't detailed comments documented, only scores.
2
● The company is integrated with design, SMT and assembly in house. Other key components and process,
such as battery, mechanical parts, tooling, are outsourced within 2 hours' drive.
2
Supplier Management - 2.5
● Supplier performance is mainly managed per QDSC, twice in a year with records maintained. Supplier is
categorized by performance (ABC level), order allocation will be affected by final rating.
3
● No official process is found to mitigate supply chain risks, especially for single-source or long-lead time
supplier.
2
Logistics - 3
● There any't any big logistic challenges as the company has built long-term partnership with several
forwarders, and there is a dedicated team (2 people) to handle delivery stuff.
3
● The company is capable of importing and exporting materials, especially overseas shipments to US. 3
Cost Reduction - 2
● The company is actively reducing cost for mass production (profits shared), however, for risk buy or NRE
cost, they often follow customer budget requirements.
2

Supporting photos
MRP system Supplier selection process

A - R&D Organization
B - R&D Tools
C - Process & Procedures
D - Design Expertise
R&D and Engineering Capabilities
Observations Score
R&D Organization - 3.5
● The company has 16 engineers in R&D organization including 5 electronics engineers, 6 mechanical
engineers, 3 software engineers and 1 system integration engineer and 1 manager. Average exprience is
8.5 years.
4
● The company outsourced a few R&D partners from Shenzhen to propose solutions for specific design
requirements especially for ODM products but all of the solutions from these partners are reviewed and
revised by them before releasing to clients.
3
R&D Tools - 2.5
● The company uses Solidworks, Pro/E, UG, CAD, Synosys, Ansys, etc. 3
● The company has a small prototype workshop including SMT, final assembly and basic test validation
equipments for functionality and reliability test, however, they need to outsource mechacnical parts
including plastic, metal, etc. and prototype suppliers.
2
Process & Procedures - 2.2
● The supplier has a documented product development process, roles and responsibiliities, functional
process flow charts and also the process is very well controlled in their new product development system,
however, only Chinese version is available.
3
● The company has very mature design changes process and procedures, the latest version is version 5.0.
All of the design changes records both from clients, suppliers and their own company are well
documented.
3
● The company has a documented product development/design planning schedule, project review meeting
minutes and verification checklist with GO/No Go with approval signature/records.
3
● The company can't certify that they identify, review and has the product design input requirements
including customer requirements, product function, regulatory and environment and target for reliability,
durability, lifecyle and quality.
1
● The company doesn't have sufficient records to certify that they identify, review if the product design
output can meet their product design input requirements and the corrective actions are not very well
documented.
1

Design Expertise - 2
● The company designed 5 products (Not ID design, but EE and ME design optimization) and 3 of them are
still in sale.
2
● The solar charger product for US and Europe market is the most successful product designed by the
company.
2
● The top 3 design expertise of the company: PCBA layout, plastic and metal parts DFM, audio products
system integration
2
Supporting photos
R&D organization chart Product development process

A - Quality System
B - Incoming Materials Control
C - Process Control
D - Continuous Improvement
E - NCR Management
F - Measurement System Analysis
G - Traceability
Quality Management
Observations Score
Quality System - 2
● The quality system was audited by internal team and external 3rd parties including SGS, TUV, etc. which is
in accordance with the approval annual plan. The audit report is available for review but the corretive
action plan is very rough.
2
● The quality objectives for key clients are aggressively defined, recorded, monitored and comuicated with
the whole organization in regularly basis, however, not for all of the clients.
2
● The quality management organization is very clearly defined with names, roles and responsibilities,
however, the authority and interrelation of all personnel who manage, perform and verify work are not
defined.
2
Incoming Materials Control - 2
● The company has process and documents to identify quality requirements for materials inspection
criteria review and approval but it is not detailed enough to guide IQC how to implement that in practice.
2
Process Control - 1.5
● The quality control plan is existed but there is obvious variance during the implementation stage
especially the in-process quality control.
1
● The company has a quality statistics analysis system but it is only implemented very well for key clients. 2
Continuous Improvement - 2.5
● The company actively implemented quality improvement projects' plan including lean production, six
sigma, etc. for key clients and it is only implemented as requested for small clients.
2
● The company has established and implemented a process for managing corrective and preventive
actions.
3
NCR Management - 2
● The company drives NCR responsible departments to do the analysis and also establish a prioritized plan
of reduction but it is not executed throughout and consistent with the quality system management
system requirements.
2

Measurement System Analysis - 2
● The company has sufficient measurement system to ensure customer performance and specification
criteria can be met, however, there isn't sufficient evidence to show that MSA has been effectively
deployed to maintain measurement system in good condition.
2
Traceability - 2
● The rotation of stock (FIFO), expiry date is very well executed. The bar code management is implemented
from incoming to outgoing. Very weak color visible management system.
2
Supporting photos
Quality objectives tracking record Quality statistics analysis report
Measurement system

A - NPI Management
B - Lean Implementation
C - Process Control
D - Change Management
E - Traceability
Manufacturing
Observations Score
NPI Management - 2
● The company has established and excute a mature NPI(EVT, DVT, PVT) process and has done the phase
gate review with the clients. However, the project technical risks anticipation is not sufficient due to lack
of experience for certain technology.
2
● The company has a project NPI risk assessment checklist and it is reviewed in each NPI stage with action
plan to implement that, however, assembly and testing risks were not very well anticipated due to lack of
experience.
2
Lean Implementation - 2
● The workshop layout is standard, flexible but not very scientific for seasonal demand. The work station
design is professional to minimize the movement and waiting time of operators.
2
Process Control - 4
● The company works out work instructions, test specification and inspection criteria upon identifying
requirements of customer (such as product/packaging specification, drawing, golden sample, jig, etc.)
4
● The work instructions cleary specified machines, equipment, tools, fixtures and program to be used. Also
it indicated assembly specifications and machine setting (e.g., solder temp, torque driver setting, and
adjustment/test specifications).
4
● The operators are trained systematically (WI, quality standard, defective sample, safe operation, etc.) and
have certificate to work on the station after qualification test? The training records are available.
4
Change Management - 2
● After the process changes, are all documents (such as WI, flow chart, FMEA, control plan, SIP, etc.) were
updated but not in-time as requested.
2
Traceability - 2.5
● All of parts can be identified to indicate production and test status, and Finished Products clearly
identified and marked. There is a traceability system to track all stages of the manufacturing process and
each production lot.
4

●
On-site defects are not very well identified, classified controlled and recorded by operators. 1
Supporting photos
NPI process Production line layout
Traceability system

A - Child Labor
B - Overtime Work
C - Labor Contract
D - Fire Protection
E - Environment Protection
F - Certification Compliance
CSR
Observations Score
Child Labor - 4
● The company didn't employ any child labor and the company also have a very strick policy to prohibit
that.
4
● The company didn't employ any worker under 18 and also they have a policy and procedure in place the
HR needs to apply local government's approval.
4
Overtime Work - 2
● The overtime work is paid at an addiontional rate per local law requiements but the max working hours is
exceeded in hot season, the company is applying special approval for flexible work hours scheme
certificate.
2
Labor Contract - 4
● All employees signed official labor contract in Chinese and each employee are communicated and got the
copy of the labor contract.
4
Fire Protection - 4
● The company set up and maintained fire protection and exit gate, etc. in accordance with local law
regulations and the fire-code authoriztion is still valid. The company also did fire drill a few times every
year, records are available.
4
Environment Protection - 4
● All chemicals or wastewater are treated (e.g. neutralized or processed) as required by local law or site
permit prior to going to a sewer or drainage system.
4
Certification Compliance - 2
● The company have all necessary applicable environmental permits to conduct operations (e.g. fire-code
authorization, Environment Impact Assessment).
2

Supporting photos
Policy for employing under 18 Fire code authorization

Factory Disclaimer

Important Notice
The above results reﬂect Insight Solu ons Shenzhen Limited's ﬁndings at the me and place of
assessment. This report does not release the buyer or seller from contractual responsibili es,
nor does it prejudice the buyer's right of claim toward the seller/supplier for compensa on for
any apparent and/or hidden defects not detected during assessment or occurring any me
thereafter.
This report is presented for the purpose of evalua ng services and may not be used, reproduced
for any purpose, or disclosed in any manner to anyone other than the addressee and employees
or authorized representa ves of the addressee without our wri en consent or as otherwise
required by law.

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