Assessing the Risk of a New Supplier Relationship

Supplier Relationship Management isn’t necessarily a new concept, but in today’s COVID-related, digital climate, its scope and structure should be formalized and followed diligently. Instead of a transactional interaction and a contract that gets shoved in a filing cabinet until renewal, GEP states that the nature of the vendor/supplier relationships is shifting to just that: relational. Long-term.  A constant conversation that lasts throughout the contract – not just at the endpoints.  Now, of course in any relationship there is risk. 

Without diligence or with diligence only executed at the endpoints, it is much harder to figure out where the relationship went wrong if problems occurCNN reported that the HHS’ Assistant Secretary of Preparedness and Response misappropriated the millions of dollars allocated to the Biomedical AdvanceResearch for administrative and office expenses, dubbing it the Bank of BARDA. If misappropriation and mistakes can happen in an organization with that degree of oversight, they can happen anywhere.   

Gaps in normalcy like shipping delays, business shutdowns, limited manufacturing capabilities, and a higher-than-average online population gives a fraudster the perfect opportunity to slide in. So how can you identify whether your supplier is one you can count on?  

GDC agrees with the PWC categorization risks in a supplier relationship.  The risks are broken up into five segments:  

Reputational Risk 
A reputational risk means your business’ brand is affected. This can happen when the end-user experiences a product failure or substandard quality as a result of a bad supplier.  

Resilience Risk 
Resilience risks affect the customer’s access to the product because of a bad supplier. This can happen if a crucial part of your product is missing, and you must deem it out of stock. 

Data Security and Privacy Risk  
63% of data breaches happen from third party access, so strict security measures should be enforced in order to prevent stolen customer, employee, or partner data  

Regulatory Risk 
Regulatory risks happen when a business violates the country- or jurisdiction-specific compliance requirements for outsourcing or signing with a supplier.  

Commercial risk
Commercial risk can happen when supplier failure results in inaccurate or over billing, or when the costs of the supplier partnership is larger than the profit.  

Now that you know your risks, it is time to think about how to solidify your process for supplier management and risk prevention.  

Luckily, there are a few best practices and guidelines out there to lay the groundwork 

Vendor Selection 
This is where we come in. Global Data Consortium is a data-as-a-service company that delivers real-time, locally sourced business verification for financial institutions around the globe to combat reputational, regulatory, and commercial risksWhen you use GDC’s Know Your Business solution, you can choose from three types of checks with varying levels of verification and customizable match rules to meet whatever level of compliance your organization requires.  

The key to a successful supplier relationship is to never let the bad ones get to you in the first place.  Whether you’re seeking to verify the legitimacy of a potential supplier, conduct a risk analysis, or confirm the beneficial owners and directors, GDC’s KYB solution helps you kick your supplier relationship management process off with a head start.  

Contract  
Setting a contract up with your supplier means setting expectations up with your supplier. Make sure both parties are aware of the duration of the partnership, quantity of work, and quality of service expected.  

Vendor Management 
As stated above, the nature of a supplier relationship is shifting. Monitor your partnership throughout the life of it and keep an open line of communication.  

Contingency Planning 
Even with all the precautions listed above, things can still go wrong. If a supplier falls through, have a backup plan so you can still avoid a resilience risk.  

And there you have it! Although every organization has its own structure, these best practices should set the groundwork for what will be an exceptional supplier relationship management process.  

Want to start your supplier relationship management process off on the right foot? Check out our page to learn more about how GDC’s Know Your Business solution can help you minimize Regulatory, Reputational, and Commercial risks for a supplier relationship you can be confident in.  

RapidRatings for Supply Chain Risk Managers: This Moment is Yours (and The Next One Too)

by RapidRatings

In painting, there is an oft-used technique where colors, lines, and shapes are applied with increasing or decreasing intensity to create atmospheric distance. This technique obscures images by imitating the conditions produced in the atmosphere: fog, clouds, mist, and even gloom.

In Supply Chain (writ large), there is also a type of atmospheric perspective.

More so than just the snapshots of cargo moving through air, land, or sea—risk management views can be obscured by great time-distances or (potentially) illusory information that underpins a given outlook.

But in your role, you can’t have that. You need an unobstructed view; one dependent on clear, reliable information to manage risk in its many forms. Real data matters.

Even pre-pandemic, the world was getting riskier. And the decisions that supply chain risk managers made on any given day, were made more complex by changing weather patterns, natural disasters, new cybersecurity threats, and dynamic changes in international trade.

With the pandemic, that complexity has multiplied; and your role made even tougher. And “Supply chain” is now at the tip of everyone’s tongues (even consumers).

Your perspective (the supply-chain-risk-management one), has never been more important.

But to meet this moment (and inevitably the next), you’ll need accurate data, unblurred by false flags like share price or payment statements; not to mention, a standard scale to compare the financial health of your suppliers across your portfolio; and finally, a discreet, secure network of supplier information that allows suppliers to proactively, and objectively, communicate with you and your team.

Because—for most enterprises—supply chain resiliency starts and stops with you. And you should have the data and analytics tools that support all of those (ever-more-public) responsibilities, regardless of industry or geography, and beyond the day-to-day of on time/on spec fulfillment.

This is your moment. How will you make your mark?

Save time and resources by outsourcing your private company supplier financials to a company that has a track record of discretion and success—in over 150 countries.

Conduct accurate, comparable (and sharable) assessments with accurate scoring based on 73 efficiency and resilience ratios, 24 industry models, and decades of data from companies that have not only defaulted or filed for bankruptcy—but those that have survived and thrived.

Have meaningful conversations (internally and externally) with automated reporting that includes talking points in a relationship-centric dialogue, so you can ask the right questions—with or without financial expertise.

Connect the dots of supplier information management with an advanced data and analytics platform,  Trust Your Supplier, that integrates validated risk information into supplier profiles for advanced insights, accelerated onboarding, and trusted exchange of information.  

And dissipate the fog; get an early warning on public and private suppliers, alike, through predictive technology that’s purpose-built to have more meaningful business relationships—by mitigating and solving challenges before they turn into disruptions and dramatically impact or break the bottom line.

To learn more about how RapidRatings with Trust Your Supplier can help support supply chain risk management in the pandemic era, please click here.