Long-term supplier risks often accumulate quietly: incremental quality drift, staff turnover, undisclosed subcontracting, or cash-pressure shortcuts. This field framework gives you a compact, repeatable review template—cadence, KPIs, governance questions, and renewal/exit criteria—to surface those slow-building problems and decide whether to sustain, remediate, or reconfigure a China partnership.

Purpose and approach

Treat the Supplier Relationship Review (SRR) as an operational governance instrument, not a one-off audit. The objective is to surface trends and make clear decisions: invest in remediation, change governance, or move on. The framework borrows the practical logic of due diligence—identify, assess, act, monitor, and communicate—and translates it into a sourcing cadence and decision checklist you can use in the field.

Review cadence and owners

  • Quarterly operational check: quick KPI update, recent issues, corrective-action status. Owner: Buyer’s Category Manager + Supplier Account Lead.
  • Semi-annual governance review: contract clause review, pricing/lead-time re-confirmation, capacity reassessment. Owner: Sourcing Lead + Procurement Ops.
  • Annual strategic review: total cost of ownership (TCO) reassessment, long-term capacity, investment needs, ESG risk profile, renewal/exit decision. Owner: Head of Sourcing / Country Manager.
  • Triggered ad-hoc review: bankruptcy warning signs, repeated compliance issues, force majeure, sudden capacity loss.

Map each supplier to the appropriate cadence at onboarding and update this mapping after major events (M&A, relocation, product complexity changes).

Core performance KPIs (track trend, not just the one-off)

Focus on a short set of KPIs you can validate in-country; avoid vanity metrics.

  • Quality: PPM or defective units per 1,000 shipped + trend over rolling 6 months. Target: supplier-specific baseline. Record root-cause closure time.
  • On-time delivery (OTD): orders delivered on agreed ship week. Track early/late % and average days late.
  • Lead-time adherence: purchase order lead time vs. planned lead time.
  • Capacity utilization: available capacity vs. committed volume; flag >80% sustained utilization risk.
  • Corrective action effectiveness: % of CAPAs closed on time and reoccurrence rate.
  • Financial signals: change in payment behavior, requests to renegotiate terms, or consistent invoice disputes.
  • Governance/ESG indicators: evidence of worker contracts, health and safety incidents, and evidence of subcontracting.

Use a traffic-light system per KPI (Green/Amber/Red) and capture the narrative for any Amber or Red score.

Governance questions for the field review

Use these short, direct questions during visits or calls. Validate answers with documents or photo evidence where practical.

  • Has the supplier changed key personnel (plant manager, quality manager, finance lead) in the last 12 months? If yes, how was knowledge transferred?
  • Is any production currently subcontracted or moved to a different site? Who performs incoming/outgoing inspection on subcontracted work?
  • Any recent CAPAs for recurring defects? What root causes were identified and what preventive steps are in place?
  • Are there material late-purchase-order approvals, backlog, or confirmed orders that exceed forecast accuracy by >20%?
  • Are bank references, credit lines, or payment behavior unchanged? Any unplanned requests to change payment terms or accounts?
  • Is the supplier compliant with required import/export documentation for your markets? (Remember to verify import paperwork and customs obligations with official sources for your destination market.)[1]

Document answers in a single SRR form per supplier and attach supporting evidence: inspection photos, CAPA records, banking communication, shipping manifests.

Renewal, remediation, or exit criteria

Define clear thresholds before a review. Use a three-path decision matrix:

  • Continue with active remediation: Conditions — single KPI in Amber, CAPA in progress with clear milestones, supplier committed resources (extra shifts, test equipment), low financial signals.
  • Conditional renewal with governance changes: Conditions — repeat Amber issues, changes in management or subcontracting, capacity nearing limits. Actions — stronger contract clauses, price/lead-time reopener, increased inspection frequency, escrow for tooling, or partial split sourcing.
  • Exit/phase-out: Conditions — persistent Red KPI(s) for two consecutive review cycles, repeated undisclosed subcontracting, financial distress indicators (payment avoidance, supplier insolvency signals), or legal compliance breach that cannot be remediated quickly.

When choosing exit, build a phased run-out plan: secure inventory, negotiate last production schedule, and preserve IP rights and tooling recovery. Avoid abrupt purchase stoppage unless there is danger to product safety or legal exposure.

Meeting checklist (for a 60–90 minute field review)

  • Status recap: last SRR decisions and actions (5 minutes)
  • KPI dashboard review: last 6 months (15 minutes)
  • CAPA deep dive: top 2 recurring issues (20 minutes)
  • Operational constraints: capacity, lead-time, suppliers/subcontractors (10 minutes)
  • Governance/contract items: payment, banks, tooling, change control (10 minutes)
  • Agree actions, owners, deadlines; set next check-in (10 minutes)

Capture commitments on-site and follow up within 48 hours with an agreed corrective-action log.

Practical documentation to keep at hand

  • Latest signed contract and main amendments
  • Production routing and BOM
  • CAPA history with closure evidence
  • Proof of export/import documentation for your market
  • Bank/payment documentation and recent supplier invoices
  • Local contact map (operations, quality, finance, legal)

Realistic next action

Pick three suppliers that represent 60–70% of your China spend. Run a pilot SRR using this template: schedule one quarterly operational check and one semi-annual governance review for each over the next 90 days. Use the pilot to refine KPI thresholds and the decision matrix before rolling out to the rest of your panel.

Remember: this framework is operational guidance. For legal, tax, customs, or compliance interpretations, check the relevant official sources and engage qualified local advisors.

References

Remember to verify import and customs steps that apply to your market; for an overview of import rules and documentation for the EU see the official guide.[1]

[1]: https://trade.ec.europa.eu/access-to-markets/en/content/guide-import-goods "European Commission — Guide for import of goods"