Exercising Due Diligence When Choosing a Supplier
The extent of any due diligence procedure will be determined by the cost of the services to be procured, the importance of the services to your business, and the risks involved if the services were not provided or provided negligently. However, whatever the size of your business, there are some key steps you need to follow.
Know your needs and preferences. You should be clear from the beginning what you are aiming for . This will help you see what specifically you need from your supplier, not just as far as their service offering is concerned but also their values and how they treat their customers.
Studying the Market
A Quick Overlook of Businesses – Your Cheatsheet
Knowing what you want and need from a supplier, you can draw up a shortlist of prospects through a “Request for Information” document (RFI). This concisely outlines the necessary goods and/or services and asks for information related to the capabilities and competencies of suppliers.
What No One Knows About Resources
Researching Prospective Suppliers
Here’s a checklist that will enable you to evaluate potential suppliers’ abilities and fit with your organisation:
Business Identity- Find out who you’re dealing with: are they legit and does the person you are negotiating with have the authority to commit the supplier?
Financial Background- If a supplier has dealt with an operating loss, or a substantial loss of revenue in the past few years, this could indicate a deeper problem.
Delivery of Goods/Services – Does the supplier’s proposed method of addressing your requirements jive with your present practices?
How do they plan to handle any challenges?
Are they capable of delivering the promised services for the quoted price? How do they compare with others on this particular aspect?
On this account, how do they compare with the others?
Quality – Examine the credentials and/or standards’ accreditations of the supplier .
Cost- Compare quotes from different suppliers. Take note however that best value for money isn’t necessarily the cheapest price.
Business age – Longevity may increase your confidence but a younger company can be innovative in approach and attitude.
Track record – Ask for feedback from other clients (you may know some of them).
Speak to your prospective supplier – Not only is this a great way of seeing if you will be able to work together but also provides you a chance to check out their premises, look at samples of service deliverables or witness demos on how the services are going to be performed.
Risk Assessment and Management
Once you have appointed your supplier, have a risk register describing relevant risks and how to manage them. This may be referred to over the course of the relationship.
Choosing Data Processors
You may have to share data with your supplier, but make sure they are fully aware of and compliant with existing data protection regulations.