How to mitigate risks with Vendor Due Diligence?

Vendors - Businesses can’t survive without them

Vendors or suppliers are a critical part of the business and companies are increasingly focusing on developing long-term strategic alliances with vendors that are mutually beneficial. Vendors are essential to every business. Whether sourcing raw materials or components to manufacture the finished goods or to supply products that are resold, the contribution of vendors is critical. Every business also consumes in terms of overheads supplies such as the Internet, paper clips, water, food or other supplies. Vendors are also valuable sources of information and help businesses evaluate the market for new services or products, monitor competition and identify new opportunities. By entering into a partnership, vendors can also help streamline costs and enhance productivity.

Vendor Due Diligence is a Critical Connect

Vendor due diligence is the critical connect between service provider and the beneficiary. It helps businesses in the following ways

• Enhance their understanding of the vendor
• Identify success factors and gain insights on all relevant matters pertaining to the vendor
• Understand strengths and weaknesses of the vendor that can be either built upon or resolved
• Engage reliable vendors that help in the easy conduct of business
• Connect better with the third-party vendors
•  Make a data driven/fact-based decision regarding a deal/partnership Vendor due diligence assures all stakeholders that the vendor is ethically sound, financially stable and has a corporate structure that is effective. The board members and leaders can take comfort in the fact that the necessary processes are in place with the vendor with attention to proactively managing risks.

Protect brand reputation with vendor due diligence

Research shows that close to 80% of market value originates from intangible factors including goodwill, reputation and intellectual capital among others. During Vendor Due Diligence, special emphasis should be paid to checking the reputation and character of vendors to mitigate risks to reputation. The vendor due-diligence process should include a thorough evaluation of all concerns that might affect the reputation of the brand, including factors such as pending lawsuits, ineffective quality measures or product-testing, liability concerns etc.

(Also Read: Start-Up Mayhem: Conduct Full Power Due Diligence )

At AuthBridge, we use latest technology to screen the web as well as conduct quick research to deliver comprehensive, accurate reports with special emphasis on character, values and reputation of vendors. With highly customizable vendor due diligence solutions, businesses can compare the reports of different vendors to shortlist the most suited ones for their specific needs.