Identify and manage supplier risks

2 February 2018 8:00am

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Suppliers can fail you in many ways like supplying inferior quality goods and services, missing deadlines or even through data breaches.

In many instances, the procurement function of supply chains is measured by its efficiency and success in sourcing reliable commodities and services at a reduced cost. Beyond cost savings, procurement departments also need to ensure that the business is exposed to minimal risk during the procurement process.

Risks are ever-present, however, some are more avoidable than others. This includes the effects of mistakes and failures by suppliers, which can have a disastrous impact on a business, says Rudi Kruger, General Manager of LexisNexis Data Services.

“Quality disasters may result in additional costs to the buying firm, while failures in terms of timing will affect your ability to deliver to your customer. Suppliers may also enter into fraudulent relationships with employees, which creates opportunity for conflict of interest.”

"Overall, these kind of risks affect the bottom line and reputation of a business," said Kruger.

When suppliers are not able to perform at their best, buyers need to be aware and ensure that they are always in a position to safeguard the operation when the need arises. This can be achieved through effective risk management, with the following tips in mind:

  • Research the supplier to identify risks – It’s important to gain critical insight into suppliers by researching their performance and capabilities. Gain information on where suppliers source from and the challenges they face within their own supply chain. Suppliers must be transparent and willing to declare crucial information that could potentially affect your business. However, information can also be obtained by having access to the supplier’s company records via online solutions like Lexis ® Diligence.
  • Know who you can trust - Once the most trustworthy suppliers are identified, build a preferred internal supplier data base. This will ensure procurement will not only have access to the right combination of suppliers, they will also have a pool of reliable suppliers to turn to when others fail. A preferred suppliers list allows businesses to attain the best overall value. Having knowledge of cost estimates, delivery capabilities and financial stability means you can invest more trust in your preferred suppliers. A solution like Lexis ® ProcureCheck allows you to create your own internal vendor list with preferred and restricted vendor indicators that can be managed easily.
  • Continuously vet suppliers - Even previously reliable supplies can fail. Therefore it’s important to always remain vigilant and protect your organisation and its assets by monitoring and uncovering negative news on the supplier on an ongoing basis.

  • Leverage technology - Technology and digital solutions like Lexis ProcureCheck serve to make the procurement process simpler, smarter and safer, saving time and money. The solution assists the procurement, compliance, forensic and internal audit departments in their procurement vetting process and vendor management, by offering an online automated workflow tool that will assist in mitigating risk. Used in conjunction with Lexis Diligence, the powerful solution enables users to manage reputational risk and investigate negative and positive news on suppliers. Lexis Diligence goes further by protecting your organisation from fraud, extremism and activism, counterfeiting, political risk and other criminal activities with its many due diligence capabilities.

For more information, visit, Lexis ProcureCheck and Lexis Diligence


About Rudi Kruger

Rudi Kruger is the General Manager of LexisNexis Data Services. He is responsible for African and International risk solutions. He has 11 years banking experience with strong focus on trade services, risk and compliance. He successfully completed various courses within the banking industry, as well as IOB Certificate in banking and completed a MAP program at WBS in 2014. Rudi is responsible for the execution of new business development, strategy and sustainable growth, by introducing new products offering and enhancements to the Sub Saharan African market