Are You Slipping into Supplier Risk?
Written by: Teemu Toroi – Director, Data & Analytics Product Line Management at Basware
In a Deloitte study about third party governance and risk management, 94% of executives interviewed expressed low confidence in their current tools used to manage third party risk. Read the latest on Basware Vendor Manager and the newest features that help keep your organization safe.
When you start your search for a new car, chances are you’re not buying the first one you see. You read about best gas mileage, reliability, safety features, and accessories. You take your time talking to friends and family. You even go as far as to ask that random person in the grocery store parking lot about the car you’re interested in. Because at the end of the day, this vehicle will be tasked with keeping everyone safe, as well as reliably getting you from point A to point B and delivering great value for its price.
If this much research goes into the purchase of a car, why should your evaluation of potential and current suppliers be any less?
The slippery slope of supplier risk
In the modern world of purchase to pay, your organization has access to a world of suppliers thanks to open business networks. Connecting with suppliers across the globe opens up the door to finding the perfect supplier for your needs. But it also opens up the door to something not quite as pleasant—risk.
Failing to thoroughly get a handle on managing supplier risk could lead to:
- Supply interruptions or discontinuities
- Critical technology failures
- Cyber attacks
- Vendor fraud
- Financial failure and cash flow issues
- Environmental incidents
The last thing you want to have happen, particularly in a climate where social media moves news at the speed of light, is deal with a PR blow-up due to one of the above issues. Especially when it could’ve been controlled by ensuring supplier compliancy and risk management.
Take charge and gain visibility
In order to take charge of supplier risk and ensure you have full visibility into your suppliers, we recommend taking these three important steps.
1. Enable “always-on” risk management: Know your suppliers. Know when change happens and provide timely notification to enable early action. When you provide continuous monitoring and timely notifications to your Procurement and AP teams, they’ll be empowered to better control their purchasing and payment processes.
2. Automate risk management: Automated risk management will free up time for strategic initiatives. So, instead of spending hours gathering supplier information and obsessively checking regulatory compliance mandates, you can leave these tedious processes to automation. Then, your time can be better allocated evaluating potential risk and taking preventative actions if the time arises.
3. Enable a systematic approach to supplier monitoring: Through automation, you can extend monitoring beyond your current top suppliers to reach new suppliers and eventually, give more visibility into your long-tail of suppliers.
Basware Vendor Manager’s new feature: Supplier Risk and Compliance Management
Through Basware Vendor Manager, buyers can move the supplier information management responsibility to suppliers and use an external data service provider to improve supplier master data. Buyers can invite suppliers to join the Basware Network and further enrich supplier information against both Dun & Bradstreetand Mastercard Track global databases.
Dun & Bradstreet is integrated directly into Vendor Manager and gives you enhanced visibility into over 260 million records worldwide. When you have a supplier inquiry, you simply supply what information you have to Dun & Bradstreet and they return to you enriched supplier data.
And now, Basware has partnered up with Mastercard to offer customers Mastercard Track Trade DirectoryTMinformation through the Basware Source-to-Pay platform. Mastercard Track Trade Directory is a secure repository integrated directly into the Vendor Management process, that includes information such as:
- Credit scores for 150 million companies worldwide.
- Sanctions lists (OFAC, HMT, UN & EU major lists)
- Law enforcement
- Financial regulator
- PEP (Politically exposed persons)
- Adverse media
Mastercard Track Trade DirectoryTM enables your company to retrieve key information relating to your suppliers. And for customers with a high supplier volume, this constantly updated service helps give more information regarding existing and new suppliers while decreasing the risks associated with supplier financial and compliancy status.
Checking your suppliers risk factor is easy. Simply import distinguishing supplier data into the Mastercard Track service. Trade registry numbers, VAT-IDs, or TIN are the strongest supplier identifiers. Then, a confidence code value ranging from 1-10 (with 10 being of the highest confidence) is returned back to you. With a high confidence code, you can rest assured knowing your supplier is low risk.
Suggest New Vendors with Configurable Forms
In the most recent release of Basware Vendor Manager, we’ve introduced the ability to create new vendor requests. A configurable form can now be created within Vendor Manager with the intention of collecting the customer’s information for review. With this information, and after enriching the data through Dun & Bradstreet and Mastercard Track Directory, approvers can decide if the vendor should or should not be added into the system. This provides a central location to propose new vendors and is accessible for all predefined customer users. And thanks to the customizable nature of the vendor creation form, your organization can implement regional and intercompany requirements right into the form itself.