ASSESSMENT OF COMPANY AND SUPPLIER CAPABILITIES
The assessment of the capabilities of a company or any of its suppliers is a time consuming process. This process requires professionals with backgrounds in different disciplines such as executive or mid-level management, manufacturing, engineering, quality, purchasing, accounting and finance. The assessment process will require a thorough analysis of the entire operations within the organization. The capability assessment may include all or any of the following areas depending on what the customer wants:
The main criteria for an organization like ESTG Inc. to be called in to assess the capability of an organization or company, is when the organization encounters problems in its performance that have led to poor profitability or loss, poor product quality or increase in operational cost. The purpose of assessing the capability of the organization is to identify gaps in the management and or operational processes that can be corrected to eliminate the poor performance issues.
Organization Structures and Management
Describe Companies with weak leadership tend to produce dismal results. Sometimes owners and shareholders fail to pay attention to the organization's leadership that constantly produce poor performance and focus on unecessary attention on other areas of the business that they believe may be the main culprit for poor results without good data to help arrive at the conculsion. Changing some members of the leadership team or changing the behaviors and style of the leaders may provide the required boost that the company needs to move in the right and positive direction. Also, the overal strategy employed by the leaders may contribute to poor performance for the entire company or for a specific department. As the saying goes, "You are as good as your weakest link". This means that poor performance by one department may lead to the poor financial results for the entire organization. In fact, this should be the first area to be assessed during the business assessment process.
¨Identify the proper organizational system for the company and for any of its business units. Example: matrix organizational
structure versus streamlined vertical and horizontal organizational structures.
¨Redesign of corporate and department organizational structures to align with business units and performance measures or goals.
¨Align organization structures to business units and to performance measures or goals.
¨Implementation of the organizational structure along with its business performance measures and goals.
Financial and Management
Proper attention should be paid on the financial and cost management strategy of the company or supplier. This requires that the assessor determine if the company or supplier utilizes “Overall System Cost Strategy” and “Unit Cost" or "Activity Based Cost Strategy”. Over all system cost strategy implies that the company or supplier lumps all of its cost elements together regardless of the commodity and then balances its books based on total cost approach. Unit Cost or Activity Based Cost Strategy implies that the company or supplier manages its cost based on each commodity’s cost contribution to the system. For example, if commodity 'A' is the main culprit for lack luster performance of the organization, the company or supplier will tackle its cost reduction effort based on that commodity. The following items are thoroughly reviewed and analyzed during the financial phase of the assessment process.
¨Profit and Loss Statement
¨Unit and System Cash Flow Analysis
¨Cost of Quality
Internal and External Quality Support
Quality Certifications such as ISO-9000, QS-9000, TS16949