While there is usually a diverse pool of suppliers available in most industries, not all of them would serve in the best interest of your organisation.
“Selecting suppliers commonly takes into consideration cost, quality, safety, reliability, service level, deliverability and convenience. However, there are some best-practice steps to take when selecting suppliers of the essentials that help a business to function and reach its operational objectives”, says Rudi Kruger, General Manager, LexisNexis Data Services.
Establish business requirements: since the main objective is to meet market demand, it is important to reach that end-goal in the best possible way. Start by establishing what the business requires from its suppliers. This can be achieved by gathering information from all affected departments and engaging on what works and what does not. Once the business requirements have been established, it will make the task of narrowing down the list of potential suppliers far easier.
Identify suppliers: a key criterion when selecting the right supplier is value. What is their commitment to customer service, service delivery and reliability? What is the status of the business in terms of ownership, operations and finances? Lastly, what does the company’s history reveal? Seeking answers to these questions will assist with measuring performance capabilities.
Gain supplier feedback and vet the response: pose questions, and request information and relevant certifications. Thereafter, screen the supplier to not only verify the information but also to identify red flags. During the vetting stage, great focus needs to be placed on the evaluation of risks which include conflict of interest scenarios and hidden/undisclosed information that may potentially mask harmful or fraudulent activities. Other aspects to look out for include business status, director status and directors that are linked to public entities.
Formalise the partnership: once a decision has been made, the next advisable step is to enter into a service level agreement. Formalising the partnership between your business and the supplier allows for increased accountability, stronger commitment and meaningful communication.
With the above steps, the stress of selecting the right supplier can be greatly reduced. “Each step is valuable and necessary, but great emphasis must be placed on vetting. Supplier vetting allows for the evaluation of a supplier’s declarations, which will, essentially, provide all of the information that you need to make an informed decision”, says Kruger, adding that ongoing monitoring post-screening is just as valuable.
While vetting suppliers independently can take a lot of time and effort, the availability of specialised tools makes achieving clear, accurate and fast results possible. Digital solutions, such as Lexis® ProcureCheck, serve to make the procurement process simpler, smarter and safer, saving both time and money. This solution assists the procurement, compliance, forensic and internal audit departments in their procurement vetting process and vendor management, by offering an online automated workflow tool that will assist in mitigating risk. When used in conjunction with Lexis® Diligence, this powerful solution enables users to manage reputational risk and investigate both negative and positive supplier news. Lexis® Diligence goes even further by protecting your organisation from fraud, extremism and activism, counterfeiting, political risk and other criminal activities with its many due-diligence capabilities.