Businesses today operate in a collaborative mode and third-party vendors are a necessary part of this collaboration. Conducting vendor due diligence is critical to strengthen trust and mitigate risks. Vendor due diligence helps businesses join hands with reliable and competent agencies while ensuring compliance with legal or regulatory mandates.
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.
Challenges in finding the right vendor
Reliability, stability, location, competency and technical superiority are some traits that are desirable in vendors in today’s competitive market. But finding all these traits in one vendor may be challenging. Besides, a lack of cost competency can also be a detrimental factor in partnering with a vendor. The key challenge in finalising vendors is reliability. A reliable supplier not only maintains the quality but also delivers on time as promised. Vendor due diligence from professionals such as AuthBridge can help overcome these challenges in finding the right vendor.
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.
Vendor Due Diligence checks
- Financial details including the overall financial profile, stability and legal problems
- Credit ratings
- Legal or regulatory compliance
- Shareholding patterns
- Financial details
- Related companies
- Database & media checks
- Organizational capacity, operating procedures
- Organizational structure
- Data security systems
- Building or personnel security
- Insurance coverages
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.