Supplier due diligence is an integral part of third party risk management. It helps you to determine the risk you are taking with new and existing suppliers. You want your suppliers to be trustworthy, secure and compliant. So there are no nasty surprises further down the line.
Deloitte’s global 2021 third party risk management survey found digital risk and financial resilience were two top concerns for businesses. So how do you currently work with new and existing suppliers? Do you know all the ins and out of your suppliers?
There are unknown risks when you sign up with any new supplier.
Financial compliance should be an absolute priority. So that you can ensure your customers, regulatory bodies and shareholders are happy. Also, you can rest at night, knowing you have checked everything.
Black Swan Chaos
Planning for any potential disaster should be part of your risk management system. A black swan event is rare, but the pandemic highlighted how fragile business could be. It made supplier due diligence more relevant and critical.
The pandemic was also an actual real live test for businesses invoking their Business Continuity Plans (BCP). Enterprises finally learnt first-hand if their BCPs were effective or not. Additionally, for those who did not have one in place, it was a cold, hard reality.
The Importance of Supplier Due Diligence
On the other side of the coin, there was a positive knock-on effect of the pandemic. Businesses became more aware of their due diligence with suppliers. Organisations realised they needed to check their suppliers in more detail. One of the critical questions to ask suppliers is if they have a Business Continuity Plan.
If your business is reliant on suppliers, you need to know everything about them.
Companies are now more willing to invest in this area. It protects them from risk and facilitates business growth. It would be best if you did due diligence assessments annually for critical and material suppliers.
The Spectrum of Challenges With Due Diligence
The spectrum of due diligence can differ significantly. Some companies have a rigid manual system in place using masses of spreadsheets. At the opposite end of the scale, many fail to gather basic requirements from suppliers.
The sheer volume of questions that suppliers need to answer can take valuable time. Also, inputting information into endless spreadsheets is never fun. If you have 300+ questions to answer, it is challenging when your department is busy.
Lack of Overview
There is a lack of overview when you are trying to assess several suppliers at once. Or, when changes take place, you have to update several spreadsheets. You might also need to join in the dreaded game of email ping pong to manage every little change.
One size fits all for all your different suppliers. Without a customised system, suppliers have to wade through irrelevant questions. This process is time-consuming and very impersonal.
Supplier Due Diligence Made Easy
Why should you make things harder for yourself? An easy solution is to automate everything and end the hard work. It will help you improve your supplier due diligence in ways you never imagined.
Third-party risk management doesn’t have to be fraught with this spreadsheet mania.
The Decision Focus solution uses an online questionnaire. That the supplier fills in on the platform using a simple link. The supplier only has to answer the questions that are relevant to them. They can attach evidence documentation.
The input from the supplier goes straight into your due diligence risk assessment. It gives you a single source of truth, so you have one golden copy. The platform’s internal framework also determines the level of risk for each supplier.
The Beauty of an Automated Suppliers Risk Framework
The sheer volume of questions that suppliers need to answer zaps time and energy. Inputting information into endless spreadsheets is never fun. When you have 300+ questions to answer, it is also challenging to maintain when your department is busy.
You might have several suppliers that you deal with annually. When you start adding new ones into the mix, it can feel like treading in quicksand. You can finally free yourself and enjoy many benefits when you get rid of the spreadsheets.
1. Integrated Assurance of Enterprise and Supplier Risk Frameworks
You might have read that heading again, but it is 100% true. You can take your risk management higher than it has ever been. You can link your supplier due diligence risk to your main risk framework. It gives you a holistic view of your risk and compliance exposure.
2. Improve Your Business Partnerships with Suppliers
Automation makes things quicker and smoother for your supplier and yourself. It is easy to click a link and fill in the required information. You can also access the supplier contract and place key performance indicators to improve your relationship.
3. Real-Time Supplier Risk Information
You can see any changes on the platform straight away. This access lets you know the risk rating at each stage of the onboarding process. So, you can act if you need to do something. There is also a consistent “master” setup instead of several spreadsheet versions.
4. Customisable Supplier Dashboard
Our solution templates allow you to create your sections for your suppliers. You could have the background, financial background, supplier evaluation, risk factor assessment, due diligence, contract/s, and risk management.
5. Information Reporting
You can use the platform as a powerful tool to create risk reports at all levels. You can have a complete overview of all your suppliers in a matter of clicks.
6. Linking with External Services
If you use outside-in scanning companies. You can feed the information into the platform. This flexibility also applies to credit scoring companies. It enables you to determine your risk exposure.
7. Role-Based Access
Our supplier risk framework allows you to put in place role-based access. So you know your system is secure at all times. You don’t need to worry about people seeing things they shouldn’t or manipulating the system.
You can set up your alerts so you can receive notifications at critical moments. You can have a richer picture of what is happening with your suppliers. You know who is doing what and the dates for completion.
9. Easy Communication
There is a communication system inside the platform that lets you tag individuals. This process helps you get rid of email ping-pong games, as it is all inside the tool.
We know this works first-hand! We now fill in supplier information for our clients using our software.
Takeaways To Act Upon
If you are not doing anything, you need to install something as soon as possible. The risks can range from financial loss, less revenue and liquidity risk. Also, imagine the repercussions of non-compliance. You might lose a supplier when you need them the most.
Think about all those workforce hours you are throwing away, managing zillions of heavy spreadsheets with no cross-reference. Why work hard, long hours checking everything, when you can automate it all.
It is best to have a flexible, automated system. It’s time to ditch the spreadsheets and use a flexible solution that you and your suppliers will love. Are you interested? Then get in touch with our team to find out how you can improve your supplier due diligence.
No strings attached and no spreadsheets. Hurrah!