- Your organization will quickly begin working with more vendors, suppliers and distributors from new geographies and will need to get moving fast on these partnerships.
- Yet, traditional supplier onboarding methods — exhaustive due diligence and infrequent monitoring — don’t allow for a quick turnaround amid supply chain pressures.
- Simplify your upfront questionnaires and develop a monitoring strategy to quickly, yet effectively, onboard your suppliers.
Amid ongoing supply chain pressures, most organizations are now working with more vendors, suppliers and distributors from new geographies. Thus, compliance can’t afford to restrict access to new suppliers. Progressive organizations are finding ways to streamline the upfront due diligence process and partner with the business to monitor third parties more effectively.
“Compliance leaders must move quickly to onboard third parties and effectively monitor for risks, but many of their traditional methods won’t cut it,” says Chris Audet, Senior Director of Research at Gartner. “Qualification processes emphasize exhaustive due diligence and post-onboarding monitoring is too slow at the outset and risky during the life of a contract.”
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So, what should you do instead? These two tips will help you spend compliance resources on what matters most for protecting the business.
No. 1: Streamline due diligence to focus on critical risks
Lengthy, exhaustive questionnaires are difficult to examine and bury valuable insights. Consider cutting down the number of questions in your survey to identify the high-risk vendors that truly deserve additional review. Zero in on a list of critical risks by leveraging cross-functional sources to inform your company’s risk analysis. Think: company hotline reports, internal audit database and enterprise risk management (ERM) reports. And to keep your questionnaire up to date, meet with business partners to regularly review changes to the risk environment, operating environment and business model.
Learn more: Your Ultimate Guide to Supply Chain Management
No. 2: Continue to monitor by third-party threat level
Even with a streamlined due diligence process, risks can still crop up later. Develop a monitoring strategy for better visibility into the relationship with your external partners. To do this, create a playbook that grades each third party’s threat level to determine who gets more attention from the business and compliance. Share this playbook with others in the business who liaise with distributors — with specific instructions that differ depending on each distributor’s risk grade.
Ultimately, compliance’s traditional method of onboarding won’t cut it anymore — emphasizing exhaustive due diligence and less frequent monitoring afterward is too slow at the outset and risky during the life of a contract.