Selecting new suppliers is a crucial step for any business, and it's important to minimize the risks associated with it as much as possible. In this blog, we delve deeper into the importance of understanding the risks when choosing new suppliers and the benefits it brings. We discuss five key aspects, from legislation to data management, that can assist companies in selecting a new supplier and minimizing risks.
Understanding your contractors and their subcontractors in the bidding project
A good understanding of the contractors and subcontractors involved in your bidding project can help identify and address potential risks in the project. It is essential to not only consider price and quality but also their safety policies, certifications, and experience. By examining these aspects, you can make an informed decision about which contractor is suitable for your project and which risks need to be minimized. Remember that a strong collaboration with contractors and subcontractors is crucial for the successful execution of the bidding project.
See: Gain control over the risks in your supply chain with D&B Supplier Risk Manager
Pre-qualification in a tender or procurement process
Include information about financial stability and creditworthiness in the pre-qualification process of your procurement project. This can help prevent a high-risk party from being awarded the project.
It is essential to ensure that the party ultimately awarded the project is financially stable and has good creditworthiness. This reduces the risk of potential delays and other issues during the project. By incorporating these criteria into the pre-qualification process of your procurement project, you can ensure that only the most suitable parties are invited to submit bids. Adding this information can contribute to the successful completion of the project within the specified time and budget, while minimizing the risk of financial problems.
Clean data provides benefits
Having a clean database is of great importance for businesses. Incomplete or outdated data can lead to inefficiencies and even errors in business processes. Data cleansing can help with this, as well as the use of external data and data enrichment. D&B data is checked and updated daily, which means you always have access to the most recent and complete information. This allows you to safely and confidently integrate this data into your own systems, such as CRM or ERP. This not only saves time and effort but also ensures that your business processes run smoothly and you can provide the best service to your customers.
Economies of scale in corporate linkages
Research the coporate linkages from your supplier.
Do you know if your supplier has subsidiaries? Uncovering corporate linkages can provide insight into the directors, shareholders, and other financial aspects of these companies. Then, check if they appear on sanction and PEP (Politically Exposed Person) lists.
Examining the corporate linkages of your supplier can help you gain a better understanding of the company you are doing business with. It can help you understand who is at the top of the organization, who the key shareholders are, and what the financial status of the company is. This can ultimately lead to greater insight into the risks associated with working with this supplier.
Another crucial aspect of investigating corporate linkages is checking the sanction and PEP (Politically Exposed Person) lists. This allows you to determine if the company in question is associated with individuals or organizations listed on these registers. If so, it could be a signal that there may be significant risks associated with working with this supplier.
See: Manage risks within the current legal and regulatory framework with indueD
In summary, investigating the corporate linkages of your supplier is a crucial step in assessing the risks of working with this party. It can help you gain a deeper understanding of the company and the individuals involved, ultimately leading to better decisions when choosing a supplier.
A complete supplier view
By enriching your data with external information (such as corporate structures), you gain more insights into your supplier database and may even discover new opportunities to optimize your procurement process. For instance, through this enrichment, you may find that multiple suppliers are related to each other, allowing you to potentially negotiate better agreements or engage in bulk purchasing. Additionally, data enrichment can also assist in mapping the risks within your supplier base, such as in the area of ESG.
By combining this information with other relevant data, such as the quality of the products or services provided, you can obtain a more holistic view of your supplier base. This will assist in making strategic decisions and enhancing the overall performance of your company.
Selecting new suppliers is not a simple task, but understanding the risks and leveraging the benefits can have a significant impact on a company's success. From ensuring financial stability to investigating corporate linkages, these five advantages offer valuable insights to manage risks and create a reliable supply chain. Embracing this approach, businesses can not only save costs but also enhance their operational efficiency and optimize the quality of their services. Taking supplier selection seriously and taking the right steps are essential to forge successful partnerships.
