5 ways to improve supplier vetting


RudiKruger.jpgEvery day, supply chain management professionals are faced with the task of facilitating a credible and transparent networking business environment, one from which corruption, fraud, dishonesty and non-compliance are absent.

“Businesses should never jeopardise the integrity and credibility of their supply chain management processes, even in their early start-up days,” advises Rudi Kruger, general manager at LexisNexis Risk Management in this month’s SmartProcurement.

Suggesting some basic tips, Kruger sums up how businesses can streamline their supplier vetting and procurement process.


1. Identify and combat corruption

Every organisation should have a risk assessment plan that guards against fraud and corruption between employees and suppliers, says Kruger. “It is important to identify warning signs before you find yourself in a compromising situation.”

A Deloitte report published in October 2014, explored some of the common red flags to look out for during supplier vetting, which include deviations in communications between procurement staff and suppliers, and personal links between employees and vendors. Thoroughly vetting your suppliers to weed out these and other red flags is a must and can be achieved with online support.

“Systems are available that assist businesses to combat corruption by identifying potential connections. They help you identify possible fraudulent activity within vendors and employees with the help of South African Fraud Prevention Services. They can also help you highlight external business interests of employees within your organisation,” explains Kruger.

2. Monitor the procurement process

Never lose track of the procurement process. This can be achieved by identifying and reviewing internal controls. “You need to know who is responsible for what and make sure that their roles are fulfilled effectively,” said Kruger.

Furthermore, it is important to have a supplier vetting checklist. “Points to include in the vetting check list are the supplier’s B-BEEE status, credibility, reputation, partnerships, past projects and services, ownership structure and history, compliance record,” he added.

3. Have a preferred list of suppliers

A preferred supplier list allows businesses to attain the best overall value. “Based on past performance alone, supply chain managers can remain confident in quality and good service and have better overall management control. Having knowledge of cost estimates, delivery capabilities and financial stability means you are able to invest more trust in your suppliers than you would in a new supplier,” said Kruger. The sentiment can be applied to vendors who fail to deliver on their promise and find themselves on a non-preferred or excluded from your list.

4. Credit checks

The financial status of major or strategic suppliers must be vetted regularly. A supplier’s credit history provides you with insight into their spending patterns and financial background. Suppliers who have sound financial backgrounds are more likely to deliver effectively and on-time, giving you peace of mind. Their spending patterns help you identify if they are scrupulous in their operations or practice erratic behaviours.

5. Make use of technology

Technology solutions are designed to manage the consolidation, auditing and supplier inspection. The comprehensive information from software solutions means you have access to all the information you need to make informed decisions without laborious background checks.

LexisNexis Risk Management’s ProcureCheck is an easy-to-use, web-based system designed to help you identify and prevent fraud schemes within procurement processes. The technology solution is built on a flexible and stable technology platform that provides automated ‘irregularity alerts’ and reports on vendors and staff. It has strong financial backing and is managed by a highly experienced team.

For more information on software systems that support supplier vetting and fraud prevention, please contact LexisNexis Risk Management on procurecheck@lexisnexis.co.za.

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