Supplier Selection - Auditing

Auditing is an effective way of gathering data. You have the ability to to build an audit plan, visit the location and ask as many questions as you would like.
Audits can also be long, boring and a huge waste of time, for both you and the auditee. Everyone has sat through one of these and tried to duck out as fast as possible, only to be dragged back for the complimentary luncheon and then the dreaded closing meeting. For me, auditing has to be more of a value added (sorry for the cliche) process. If I'm going to spend time and resource on travel and using up valuable time at someone's facility, I have to walk away with something tangible - the results must justify my work.
The most effective method I have used is a total business model approach. I do not put much faith in audits to "the standard" as that only captures a portion of what I'm interested in. If the plan is to pour money (thousands or millions annually) into an organization, I want to know a lot more about them than if they have rework instructions or if their calipers are "in calibration". This type of Q&A is a total waste of time. If an organization doesn't have the basics covered, there isn't much hope of them being and organized body all moving in the same direction.
On to the audit planning.
I find the most effective way of evaluating a location or organization is by keeping the overall scope simple. I loosely follow the Ishakawa diagram 6 Ms (Machine, Method, Materials, Maintenance, Man and Mother Nature (Environment)) and then focus on each of the major departments (Sales, Engineering, Quality, Purchasing, Manufacturing, Customer Service, IT and Support)

The plan I developed and follow looks at each department individually and asks only relevant questions, as what I categorize as relevant :). Also, the questioning method is simply what is the Condition Expected and your findings are the Conditions Realized, this removes any vagueness as you clearly state what you are looking for and report what you found.
First I look at the personnel, do they they have enough people to do the work? If I put more work into this area, can they handle it? Do they have a training program to get the group up to speed and keep them current? More importantly - Do they even know if they have the right amount of people and what their knowledge levels are? That is the hardest question to ask and have answered - basically are you self aware?
I move on to the easy stuff after that - what do you do, how do you do it, how do you track it and are you getting better? This is the list of usual suspects and going through the motions for each step of their process. The only thing here is asking these questions in the NON-Manufacturing departments. Again, are these companies self aware of the entire process or do they just focus on the manufacturing. I find this is where organizations fall down. They do not have process in place for support departments and they do not have the means to measure the effectivity and efficiency of their people.
The final round of questions is about the environment - is it comfortable, do people like it there, what type of work environment are people subject to, etc. I try not to score these with much weight, i.e. lesser number of questions, but it is important none the less. Companies that realize that the most important resource is the people working for them (again, cliche but true) are usually the highest performers.

Scoring
Again the goal is to keep it as simple as possible, 1-2-3. 1 = you are not achieving any of the expected conditions, 2 = partial achievement and 3 = fully achieving the expected requirement. When you try to expand beyond 3 different states you introduce opinion and conjecture. This taints your audit results and opens the floor up to lobbying for leniency. I look at it as either you aren't doing anything, OR what you are doing is something but not enough, OR you are in full compliance of the expectation. There is no way for someone to dispute these states.

Closing the Loop
If you can put together an audit that captures the true business from start to finish, not just the making of the parts, and can rate people accordingly, I feel that you have a worthwhile audit. These results should give you a good indication of how this organization will perform when the rubber meets the road.
If you have solid audit reporting you can now use that with the other data you plan on evaluating during the Supplier Selection process.

Supplier Selection Process

So you have a design that you think is ready for manufacturing, both at the supplier and in your own system. Now you have to go out and find the right supplier to do the job. What criteria are you going to use? Geographic location? Past performance? Lowest price?
We all know which one gets used, past performance - NOT. The powers to be usually go with the lowest price regardless of everything else. In the end, the old adage of you get what you pay for rings true. The guy that can make it as cheap as possible usually delivers late, has high scrap rates internally and a high PPM rate within your facility. And to add to that, who knows where this company is that can provide you with a low piece price, usually not right next door. The approach I prefer is a combination of as many attributes that I can gather. I do this by combining an on-site audit with any historical data available. For new suppliers making a bid, the audit is the only thing you have, unless you have a common denominator - like a business associate who deals with them or you have access to their customer list and ratings. Either way, the unknown is always an adventure. At least looking to your current list of suppliers, you know what you are getting.