22 Lessons Learned: Tips

November 14, 2017

Financial

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Exercising Due Diligence When 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, notwithstanding the size of your business, there are some essential steps you have to follow.

Know your needs and preferences. You have to be clear from the start what you are would like to achieve. This will help to determine what in particular you need from your supplier, not simply when it comes to their service offering but their values and attitude towards their customers too.

Looking into the Market
What Almost No One Knows About Resources

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 concisely outlines the necessary goods and/or services and asks for information related to the capabilities and competencies of suppliers.
Practical and Helpful Tips: Companies

Investigating Probable Suppliers

This checklist will let you scrutinize potential suppliers’ capabilities and suitability for your organisation:

Business Identity- Know the company you’re dealing with: is it legitimate and is the person you are negotiating with authorized to bind 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 suggested method of satisfying your requirements fit with your established 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 several quotes from different supplier. Take note however that best value for money isn’t necessarily the cheapest price.

Business age – Longevity can make you more confident but a newer company can use a more innovative approach and overall 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. You can refer to this throughout the course of the business 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.