Effective risk management can boost supplier relationships and uncover new providers

The dynamic between buyers and suppliers is shifting. Customers used to call the shots, but a significant rebalancing is underway. 

There are platforms available in the market that can help manage supplier risk and identify new sources of supply

Purchasing organisations now need suppliers as much as suppliers need the business – sometimes more so. It is in this more equitable environment that relationships between customers and suppliers are being reformed and strengthened.

More and more, suppliers are viewed as an extension of an organisation’s enterprise. This is a vital repositioning, not only because it gives suppliers the  power to choose who they work with, but because companies are increasingly looking to their third parties to help them deliver on key corporate objectives.

However, in this new dynamic, businesses are also held accountable for the operations of their suppliers. They are increasingly responsible for ensuring that the actions of every supplier in their value chain are both moral and legal – a tough task even with oversight systems in place.

Chief procurement and supply chain officers are tasked with managing risk and sourcing new opportunities to meet strategic aims, and some are using technology to help, much to their benefit. Meanwhile, procurement teams that don’t have oversight technology in place can lose weeks chasing information, often only to find it is inaccurate, unreliable or simply out of date. 

Risk management 

Luckily, there are platforms available in the market that can help manage supplier risk and identify new sources of supply. These solutions effectively house the oversight of your extended enterprise in one place. 

The Know Your Third Party (KY3P) platform from S&P Global Market Intelligence is one of these solutions, and primarily helps customers to manage their supply chain risk. Additionally, KY3P can be used to: 

• Select suppliers

Some 250,000 users have access to 50,000 vendor profiles, with many popular providers that work across multiple industries, already on the system.

• Monitor risk

Continuous surveillance of the performance and risk profile of vendors. The platform also provides additional detailed information, such as a cyber score or credit rating. Customers can receive alerts if an issue occurs, such as a cyber attack or looming administration, and quickly switch to an alternative provider.

• Validate suppliers

Verification of information provided by suppliers, through, at times, on-site assessments. This information can be shared across the network of buying organisations, so suppliers only have to undergo a single check. 

• Generate incident alerts

Significant Event Notification and Tracking (SENT) can remove weeks of work by companies trying to manually assess if suppliers have experienced an issue as a result of a critical event, such as the invasion of Ukraine. Suppliers on the system answer a standard set of questions, and the responses are shared with all who need them. 

In addition to the above, platforms like KY3P enable fourth-party discovery, an increasingly useful tool as companies become responsible for the actions of suppliers with whom they have no direct contact. For example, a smaller provider may be a third-tier supplier to you but a first-tier supplier to another user, but your business still benefits from access to information about it. What’s more, having multiple layers of ready-to-use due diligence in place is good for both buyers and suppliers.

Finally, using data-informed risk management removes friction, which can help improve relationships. It can also free up time for all parties, allowing them to focus more energy on value-added initiatives. 

New opportunities

Many companies, including major corporations, have committed to supporting diverse organisations. For example, companies in Australia have committed to using indigenous suppliers, while companies in the US are seeking veteran-owned firms.

However, the onerous due diligence demanded by large companies before onboarding smaller businesses can mean big barriers to entry for many. Requests for the completion of Due Diligence Questionnaires (DDQs), on-site assessments and so forth can be quite a struggle for some smaller businesses. 

Supplier risk management platforms, such as KY3P, can remove those obstacles by reducing the work. Suppliers need only answer one set of questions and one on-site assessment, or other external verification, then that information can then be shared among the platform’s community. 

KY3P is also working with some of the largest accountancy, audit and consulting companies to offer pro-bono support to help improve standards where required. 

The supplier experience 

As a reflection of the wider trend, we have shifted how we think about our network and are adopting a more balanced model that focuses on the suppliers as well as the customers.

It is an approach demonstrated by successful tech and shared economy disruptors, who are focused on the experience of the provider in addition to the client. 

The community and network found on the KY3P platform balances the power across buyers and suppliers to the benefit of them both. 

For more information, please visit spglobal.com/KY3P

By Simon Chard, CEO of KY3P, S&P Global Market Intelligence

Sponsored by S&P Global Market Intelligence, the winner in the Best Digital Solution Provider – RegTech category at Banking Tech Awards 2023