Performing Due Diligence on a Potential Supplier
The scope of any due diligence practice will be influenced by the cost of the services being obtained, the cruciality of the services to your business, and the hazards involved if the services were withheld or delivered recklessly. However, notwithstanding the size of your business, there are some essential steps you have to follow.
Identify your needs and preferences. You should be clear from the beginning what you are aiming for . 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.
Studying the Market
The Beginners Guide To Services (Chapter 1)
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 outlines briefly the goods and/or services needed and requests information pertaining to suppliers’ competencies and capabilities.
The 4 Most Unanswered Questions about Businesses
Researching Potential Suppliers
The checklist below will help you assess your prospective suppliers’ capabilities and fit with your business:
Business Identity- Know who you’re dealing with, whether they are a legitimate business and if the person you are negotiating has 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 suggested method of satisfying your requirements fit with your established practices?
How do they intend to contain any difficulties?
Can they provide the promised services for the price you were quoted? On account of this, how do they compare with the rest?
Quality – Look into the supplier’s credentials and/or industry accreditations.
Cost- Compare quotes from different suppliers. But take note that best value for money isn’t automatically equal to the lowest price.
Business age – Longevity may increase your confidence but a younger company can be innovative in approach and attitude.
Track record – Ask for comments or feedback from other clients (you probably know some).
Talk to your prospective supplier – This is not just an effective way of knowing if you can work together but also gives you a glimpse of their premises and samples of service deliverables or witness demonstrations on the way the services are going to be performed.
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.