4 July 2014 | Gyles Scott-Hayward
To many organisations, supplier management and due diligence means focusing on the contractual and commercial relationship with their suppliers - and rightly so given the financial implications for the business.
However, the scope of information an organisation is expected to gather from suppliers is evolving into a much broader set of compliance and other non-financial information. A combination of EU Directives, national legislation and CSR reporting frameworks all include requirements for organisations to understand a lot more about their suppliers’ business practices and policies. Topics growing in importance include a supplier’s approach to working conditions, human rights, health and safety, environmental performance and anti-bribery measures.
Gathering information in these areas is becoming an integral part of a procurement and supplier due diligence strategy. Having robust information you can rely on and real visibility of commercial and broader non-financial information can be the difference between identifying opportunities and risk in your supply chain, or being caught unaware.
1. Review the information you need to collect from your suppliers
The information you need to collect will depend on your sector, relevant legislative requirements, your CSR, procurement and overall business strategy. While it can be tempting to gather as much information as possible, this can quickly lead to an unmanageable amount of data that isn’t prioritised. Decide on the areas that are material to your organisation and its stakeholders.
2. Consider the limitations of your existing processes
Suppliers are often asked for similar information from multiple buyers. This means a lot of repetitive offline form filling and an unnecessary drain on resources. At the same time, the quantity of data you hold on your suppliers will become increasingly challenging to manage. At worst, asking suppliers to complete offline questionnaires becomes a tick box exercise with little ongoing value to you or your suppliers.
3. Move the process online and do something with the data
Moving the process online can save a huge amount of time for suppliers and enable you as buyers to actually do something with the information. Being able to analyse your suppliers’ commercial and non-financial information online provides an opportunity to identify gaps or risks easily, run exception reports, compare your suppliers’ performance and do it all on a global scale.
An improved supplier due diligence process that is managed online will reduce administrative costs for suppliers and buyers, increase the quality of your supplier engagement process and contribute to wider business benefits in the long term.
☛ Gyles Scott-Hayward is head of SupplierPortal at Greenstone