Vendor diligence or vendor verification is a process that is conducted by all companies worldwide. The process is conducted to know key details about the vendor and verify their credibility.
Vendor diligence is an important aspect for any company as you are trusting the vendor with their products or services to have your end product delivered as per the need. Thus building up a trust factor and having complete transparency in the way business is conducted is essential for both parties. Vendors are the source for your final product, thus a due diligence also termed as vendor due diligence VDD is crucial for all companies.
Most companies hire a team called as vendor management team to help them manage their vendors. Nowadays there are VDD software’s too available to help achieve the same. But yet having a team to manage the vendors is important. Few steps the vendor management team needs to keep in mind, so as to perform a proper vendor diligence.These include:-
1. Have a clear objective:- You collaborate with vendors to achieve a particular need. Ensure that the objective is very clear and both of you’ll have a clear understanding about the deliverable.
2. Have a fixed timeline :- Once you know what the deliverable are, fixing a time duration for the same is important. Also since most of the supplies are going to be an ongoing basis, it’s very important to decide the time frame and in how much duration every supply is going to be delivered.
3. Reasonable pricing :- Pricing and costing is something that directly impacts the profits of the company. Make sure the prices quoted is feasible for both parties, is well within industry pricing and most importantly works as per your financial planning.
4. Compliance in place :- All businesses have compliance today. So ensure both you and the vendors are aware of the compliance and stick to it. With growing businesses it is very difficult to stick to all compliance policies. Ensure your vendor is obliging on the same.
5. Consider risk and back up options :– Ensure to do a risk assessment of all pro’s and cons of dealing with a particular vendor. Also keep up a backup option, as even if your vendor fails to deliver you as a company must be still in a position to deliver.
6. Co-Relationship building :- All businesses works well when a strong relationship is built. Ensure that 2–3 top management staff have a cordial relationship with vendors. It might require some unofficial meetings to build a bond , but it will be worth for a long lasting relationship. Also it helps if the company is in need of credit, or to push some extra services at times.
7. Establish a monitoring plan :- It is important to know how your vendor functions. How the goods are delivered to you and in what condition. Having a plan to monitor these will help in ease of your business. Thus improving your productivity.
8. Review your audit plan :- After taking care of all these steps, what is important is to review your audit plan periodically. Every vendor is different and what works for one may not work for the other. So time to time reviewing it helps both parties concerned.
Thus by having an efficient vendor management team, most of the concerns relating to vendor diligence will be taken care of. Thus companies must ensure they have a proper vendor management system. This way the vendors too know whom to contact in case of any concerns rather that contacting the owners for every issue. Vendor diligence and management is crucial for every company to sustain and grow. But here the question is how to hire team for the same??And the best solution is to involve staffing solutions like FeedMyPockets which makes company much comfortable to hire and manage.