How to Improve Your Supplier Vetting Process?

Before starting a business relationship with your vendors, you need to undertake a thorough supplier vetting process to understand their backgrounds and business practices better. You must have absolute confidence in their ability to provide the products and services you require and be certain they’re capable of safeguarding your sensitive data.

Choosing the ideal suppliers for your business is critical to your procurement success, especially in today’s competitive business environment. By establishing a well-defined vendor vetting process, you can be assured of finding the right supplier for your business needs while ensuring your data is secure to reduce risk.

Use this handy guide to identify potential suppliers and spot any red flags:

Establish a Selection Criteria for Vetting Vendors

What specific conditions do you want your prospective suppliers to meet? Remember, not all suppliers will satisfy every standard.

That’s why it’s important to identify what’s most essential to your business beyond just competitive pricing. One of the most important questions to ask is whether their service or product does what you need it to do.

Want your products to be top-shelf quality? When vetting vendors, consider a supplier who may have a slower delivery rate but can provide this level of quality.

Also, set deal breakers, such as poor quality or overpriced services. By defining these types of supplier selection criteria your business will be able to better manage risks in your supply chain.

Make Risk Assessment a Part of Your Supplier Vetting Process

To reduce the potential for increased risk, we urge you to put privacy and confidentiality controls in place to address any additional risk that foreign suppliers may bring to your business.

For example, SOC 1 and 2 audits are one way to test and validate your supplier’s controls. Although completing these certifications doesn’t guarantee security, it helps to confirm that your supplier has effective controls in place.

How many suppliers have adequate insurance?

Something else to consider is whether the supplier has sufficient insurance. Most suppliers have a policy to cover any losses they may cause, like property damage or compromised data.

During your supplier selection process, remember to check whether they have a policy and make sure the coverage is adequate to cover any damages. If a supplier has insufficient coverage, choosing a different partner may be in your best interest. What about physical security policies?

Furthermore, we recommend that you evaluate suppliers’ physical security policies to ensure they account for building security in on-site projects as well as shredding and disposal procedures. Policies should also include backup plans and redundancies in case of a security breach.

When evaluating the physical security of a supplier, take note of the location and number of data centers. Storing data in multiple data centers offers greater protection in case of outages or natural disasters.

Use Vendor Vetting to Rank and Select Your Best Suppliers

Once you’ve identified your most suitable suppliers, rank them based on the criteria you’ve created for your vendor vetting process. During your supplier vetting process, it’s crucial to go beyond the basics and delve into a comprehensive set of criteria that ensures a robust and reliable supply chain.

Consider using the 10c model of successful supplier selection and evaluation, which offers a structured approach to assessing various aspects of a potential supplier’s capabilities. Use it to rank your potential suppliers on a scale from one to five for each of the 10 categories shown in the image below.

Compare Price

The final step in your vendor vetting process is to gather quotes from potential suppliers. Send a document to suppliers that lists what you need and how much, along with an estimated timeline.

Suppliers can then send you quotes with pricing based on your business requirements. Once you have the quotes from potential suppliers, you can perform a comparison based on your established criteria including pricing, quality, order specifications, and reviews.

Remember, the supplier with the lowest price isn’t always the best choice. Select the quote that offers the best value.

Continually Monitor Your Suppliers

Supplier vetting is a continuous process. That’s why your company’s risk and control measures should be evaluated annually.

By consistently assessing and making improvements to these measures you can avoid disruption and mitigate risk before your business operations are jeopardized.

Discover Valuable Business Partners

Effective supplier vetting will allow your business to develop valuable partnerships that enhance efficiency, ensure seamless supply chain management, and offer positive customer experiences.

Plus, with a proper due diligence process in place, you’ll have the information you need to make informed decisions, reduce purchase risk, and guarantee compliance with regulations.

Optimize Your Supplier Selection Process with Technology

When it comes to identifying potential suppliers, technology is pivotal to enhancing the efficiency of supplier vetting and management systems. Comprehensive e-sourcing platforms like Graphite Connect provide integrated and cutting-edge solutions for managing supplier information and facilitating transparent and fair bidding processes.

These platforms not only streamline supplier selection and collaboration but also bring a level of standardization and fairness to the procedure.

Streamline Supplier Selection

Choosing the ideal suppliers is crucial for successful procurement. Effective supplier selection is about thorough vendor vetting, understanding each supplier’s unique value and risks, and ongoing assessment of supplier relationships.

The supplier selection process involves considering factors like financial stability, quality assurance, ethical practices, and technology. Using a comprehensive approach like the 10c model helps align your choices with both immediate needs and long-term goals.

Global Manufacturer Sees 20% Reduction in Procurement Costs

One notable example of successful supplier vetting is from a leading global electronics manufacturer. Faced with the challenge of managing a vast network of suppliers, this manufacturer implemented a comprehensive supplier vetting process that incorporated both technology and rigorous standards.

By utilizing an advanced e-sourcing platform, the manufacturer was able to automate the initial stages of supplier assessment, focusing on key performance indicators such as delivery time, quality, and cost-effectiveness.

This approach streamlined supplier selection and resulted in a 20% reduction in procurement costs, not to mention a significant improvement in product quality and consistency.

Simplify Supplier Vetting with Graphite Connect

Graphite Connect simplifies the supplier vetting process with an intuitive platform that streamlines supplier selection, manages risk, and builds sustainable, long-term relationships.

Transform supplier selection from a routine task into a strategic function that boosts efficiency and overall value, minimizes risk, and contributes to sustainable business success.