Vet Your Suppliers! Good Stakeholder Relationships Will Boost Your Profits
How to ensure you get high quality suppliers
Best practice dictates that vetting procedures are in place that cover, at least:
- A review of the supplier’s financials to establish that the business has the financial means to remain sustainable and to deliver to its customers.
- The supplier has sound processes in place and the organisation is well managed.
- How long has the entity been in business? The longer the better.
- Get testimonials from the supplier’s current customers.
- Check for fraud and/or conflicts of interest. This involves establishing that none of your staff have undisclosed relationships with the supplier, that the supplier has no criminal record or any suspicious activities.
- See how the supplier responds to queries. You could call as “customer” of the supplier and see how they react to a problem.
- Check their social media platforms to ensure they are consistent with their marketplace persona.
- Culturally are they a good fit for your business? Do they have the same values as your organisation?
- Have in place ongoing processes to detect if there are any changes in the supplier’s organisation which could trigger further investigation.
Getting the most out of suppliers
In the new King IV Report there is a section on optimising stakeholder relationships by an “inclusive approach that balances the needs, interests and expectations of material stakeholders in the best interests of the organisation over time”.
This involves understanding what they want and ensuring there is a mutual relationship of trust which will last a long time and from which both parties will get the outcomes they want.
An honest, transparent relationship with your suppliers will bring good long term profit to your business.