Five ways to drive supplier compliance

Paul Snell is managing editor at Supply Management
3 May 2013

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3 May 2013 | Paul Snell in Grapevine, Texas

It's no longer sufficient to say “I didn't know” or “they didn't tell me about it” when problems at a supplier are discovered, a compliance expert has said.

Kirsten Liston, associate vice president at SAI Global, told a session at the Institute for Supply Management annual conference: 

“The discipline of compliance is all about creating a plausible infrastructure. The government and everyone else realises you can't foresee and avoid everything, but you really need to do your best and put together an infrastructure that supports it.

“There is a burden of proof for the company as a whole, the business unit as a function, and the people in it, to say what could go wrong? What is going wrong that I am not asking the right questions about? And how do I find that out?”

She presented purchasers with five tips to help drive compliance with vendors:

1.     Make ethics and compliance a factor in supplier selection. We know price is key, but don't do business with companies that are shady, because even if they have the best pricing it could get you into trouble down the road.

2.     Target and segment suppliers by importance and compliance risk. There are a lot of companies out there that have a pretty minor supplier in a high-risk country. That supplier is not crucial to the company, so it should think hard whether it wants to be associated with that vendor at all. Is there somewhere else we can get the goods or service that avoids this troublesome relationship?

3.     Create and maintain compliance profile of targeted suppliers. Once you have done your due diligence on the supplier, make profiles and pay attention to them. If there is a major change in ownership, do your due diligence again.

4.     Assign ethics and compliance personnel to supply relationships.

5.     Conduct regular assessments of supplier ethics. It can be sending out a questionnaire, or as simple as having a conversation during a contract renewal discussion but bring it up, and check to see how they are doing.

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