Practicing Due Diligence in Choosing a Supplier
The coverage of any due diligence process will be affected by the cost of the services for procurement, the value of the services to your business, and the risks of the absence or poor performance of such services. However, no matter the size of your business, there are some basic steps you must follow.
Know your needs and preferences. You need to be clear from the get-go what you want to achieve. 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
What Research About Services Can Teach You
When you know what you need and want from your supplier, create a shortlist of candidates by way of a “Request for Information” document (RFI). This quickly outlines the goods and/or services necessary and requests information as to suppliers’ abilities and competencies.
Lessons Learned About Resources
Researching Prospective Suppliers
This checklist will let you scrutinize potential suppliers’ capabilities and suitability for 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- A supplier with an operating loss, or considerable loss of revenue over the last few years may have underlying problems.
Delivery of Goods/Services – Does the supplier’s recommended approach to meeting your requirements suit your current practices?
How do they plan to handle any challenges?
Will they be able to deliver the promised services for the price they have quoted you? 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 different suppliers’ quotes. However, keep in mind that best value for money doesn’t automatically mean the cheapest price.
Business age – Longevity can boost your confidence but a newer company may be more innovative in terms of approach and attitude.
Track record – Request for feedback from other customers, some of whom you may even know.
Meet with your prospective supplier – Not only is this a good way to see if you can work together but it also offers you a chance to see their workplace, examine samples of service deliverables or witness demonstrations on performing the services.
Risk Assessment and Management
The moment you appoint your supplier, create a risk register expounding on relevant risks and how to handle them. This can be referred to in the course of the relationship.
Working with 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.