How to assess third-party risk and onboard new vendors at speed
Building supply-chain strength and flexibility despite uncertainty
The spread of Coronavirus has presented businesses across industries with exceptional challenges. For companies operating complex supply chains, labor shortages, travel restrictions, and changing consumer behavior and demands have disrupted and limited the supply of materials and services.
Understanding which suppliers are most at risk under today's fast-changing circumstances is crucial. If COVID-19 affects key suppliers, can you quickly bring in alternative new vendors to keep your business moving?
We've identified six parameters that will help you identify which engagements pose major risk. And we outline the critical factors to monitor when assessing new suppliers, so you can maintain robust due diligence and keep the wheels in motion.
When you take stock of the many suppliers your company has onboarded, how can you quickly tell which engagements threaten business continuity? Companies need to prioritize key suppliers/customers from within their global list.
Here are six ways to assess them and identify where you may need to take immediate action:
For existing suppliers that are most at risk because of the pandemic, use additional safeguards to protect your company. Perform detailed checks using relevant and contextualized public data sources, including internet searches to:
Use time-sensitive searches to look for events or triggers in the past 24–72 hours because of the fast pace of disruption is also imperative. Metrics such as daily growth rate (DGR) and R0 can also help predict exposure in the coming weeks.
When you've found alternative suppliers, the processes of screening, onboarding, and monitoring new vendors do not typically happen as swiftly and seamlessly as many companies would like. How do you onboard new vendors quickly without exposing yourself to additional risks during precarious times?
To maintain business continuity, procurement teams must assess and onboard new suppliers as quickly as possible without compromising their compliance standards. While closely monitoring their tier-one suppliers, they also need to monitor their extended third-party ecosystem.
Under normal circumstances, supplier assessments are typically detailed to minimize any risks to the firm. Today, agility is key. So, given the urgency, here are a few quick but essential factors to check for:
Though COVID-19 may have forced organizations to revisit their due-diligence processes to ensure that their businesses run smoothly, this always warrants regular refreshes. This will help your company remain viable in a volatile market, protect your reputation, comply with regulatory requirements, and prepare for future black-swan events.
As businesses work to keep disrupted supply chains connected, they need to find alternate ways to continue meeting demand, but not at the cost of adding financial, legal, regulatory, or reputational risks.
From identifying high-risk suppliers to quickly onboarding new vendors, use our risk parameters and guide to reduce the risk from new vendors, build resilience, and maintain speed and scale of service for your customers.
To see how Genpact can help, visit our enterprise risk and compliance page.