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10 signs that it’s time for a supplier health check

Gary Plant, Managing Director - Altius Vendor Assessment

Gary Plant_Managing Director – Altius Vendor Assessment

By Gary Plant, Managing Director of supplier assessment and compliance specialist Altius

External suppliers can help public sector organisations reduce cost, boost efficiency and improve quality. But the flip side is that they can also bring liability in the guise of delays, problems, waste, extra cost and adverse PR.

Here’s 10 possible warning signs that you might need to run a supplier health check.

  1. You don’t have perfect 20:20 vision of your suppliers, contractors and service providers.

Supply chain blind spots are a common symptom of sickly supply chains. Ask yourself: Do you have full visibility of your suppliers and contractors? Are you able to plot trends and spot weaknesses by mapping the full historical data? Do you have sub-contractors in your sights?

  1. You have data overload.

Have the simple spreadsheets you set up years ago grown enormous and complex? Do these spreadsheets align with your other back office systems? Can you use the information collaboratively. How easy is it to  turn the information into useful management reports and instantly retrieve requested data? If you are relying on manual processes to manage a large supply chain, chances are that you will be drowning in data.

  1. You’re taking no chances and audit everyone.

There’s no doubt that seeing something with your own eyes gives you an extra degree of confidence, but it’s expensive and often ineffective. The frequently audited supplier can becoming proficient at passing audits. Audits can be a very powerful tool if used sparingly and positively, but when overdone they become a drain on both supplier and client.

  1. Your cyber defence and data protection strategy is still on the to-do list.

One of the newest threats to your supply chain is going to get bigger and more sinister in years to come. Failing to ensure that your suppliers are cyber-compliant and data protection measures are in order can leave your business open to catastrophic breaches of data and large associated fines. Make sure a comprehensive cyber defence and data protection strategy is in place and regularly update to combat the latest threats.

  1. You don’t have clear accountability lines for assuring subcontractors.

A common concern among managers is that while they’ve got good assurance that their suppliers and contractors are in good shape, their visibility of the next tier down of the supply chain is poor.  The natural tendency is to want to gain assurance of that tier and beyond too. These conscientious managers  often start the process of getting to  know who the sub-suppliers are and start checking them, but the process is long and complex so it isn’t always completed.  Sometimes they will insist sub-suppliers are chosen from an approved list.  But when things go wrong, the first tier supply will rightly point out that you, the client, said that the sub-supplier was OK.  With the best intentions, you’ve taken away their responsibility and accountability to manage their suppliers.

  1. Your insurance bill is eyewatering.

Rising insurance premiums may be a signal that there’s risk lurking among your outsourced services and your insurer doesn’t believe you have things under full control. By demonstrating that you have a grip on supplier compliance, you should see premiums fall.

  1. Team members are tightly stretched

Have you got too many people bogged down in non-value added, reactive activities? Are you under-using their skills to manage a clunky supplier compliance process? Wouldn’t it be better to utilise their talents for value added activities, such as developing supply contracts, rather than supervising and ‘policing’ them.

  1. You worry about legal action.

If things go wrong with outsourced contracts, how easy would it be to defend your actions? Have you got a full audit trail of all the up to the minute evidence available to instantly view and download anytime and anywhere?

  1. You’re asking too much from supplier assessment.

Is your supplier assessment tailored precisely to the risk each supplier represents and proportional and reasonable?  Are your suppliers asked to jump though unnecessary hoops and assessed on criteria that have no relevance to the work they will undertake for you?  Do you stress your contractors out  each and every year, rather than keeping a continuous dialogue going and updating their evidence, as required?

  1. There’s a ‘dark’ side to your compliance process.

Does your assessment system simply measure compliance and financial solvency once a year – leaving you in the ‘dark’ about the other 364 days and crossing your fingers that you’ve got things covered for the entire 12 months. What happens when there’s new legislation or business requirements? In these instances, do you have to wait until the assessment anniversary to bring compliance up to date?

Altius has launched an online supply chain health check tool that will demonstrate how much  visibility and control you have and identify possible areas of risk.  Supply chain managers submitting answers to the quick online questionnaire receive a customised report highlighting strengths and weaknesses in their supplier relationships and suggested actions for improvement.

Complete the supply chain health check at: www.altiusva.com/supply-chain-health-check

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