Page 5 - HGR 2016
P. 5


How well do you
know your suppliers?

    Businesses spend                         that will check the financial and opera-    tion the business can proactively block
  countless hours – and                      tional stability and compliance of their    that supplier and quickly change to a
                                             suppliers – such as bank information,       supplier that is fully compliant without
    in some instances                        VAT numbers, registration numbers, tax      any disruption to the supply chain. This
  money – trying to find                     certificates and BEE certificates. All of   can only be made possible through a
  out more about their                       this information combined, is crucial to    detailed database of suppliers which is
  customers and often                        knowing whether or not a supplier is        updated regularly. For example, once
 fail to do the same with                    financially and operationally viable and    the relevant information is updated in
  their suppliers. Mark                      will help businesses avoid contracting      such a database, TransUnion is able to
Heymann, at TransUnion                       suppliers who may not be able to deliver    monitor suppliers in order to provide
looks at why businesses                      on time or in full, which can be detri-     live updates to customers about any
                                             mental to operations.                       changes that may occur. This is crucial
    need to know their                                                                   to businesses considering that they
     suppliers and the                         By failing to investigate all aspects     need up-to-date information in order to
 associated risks if they                    of a supplier – from its finances to its    understand their suppliers and to take
                                             BEE compliance – a business is also at      immediate, yet informed steps should a
            don’t.                           risk of falling victim to a supplier go-    problem arise.
                                             ing insolvent, being part of fraudulent
Suppliers are the lifeblood of a business    activities, failing to comply with regula-    The second mistake businesses often
– they provide the products and services     tions or a possible conflict of interest.   make with their suppliers is becoming
that are vital to keeping companies          For example, a company’s BEE score is       complacent. While a history of working
operational. Without them, the busi-         influenced by the scores of its suppli-     together between a company and its
ness ecosystem as we know it would           ers so it is crucial to not only check if   supplier is important in building trust,
collapse instantly. However, businesses      suppliers meet minimum requirements,        suppliers should be regularly assessed
often don’t place the same emphasis on       but to also compare levels of compliance    to ensure standards are kept high and
researching their suppliers as they do in    between competing suppliers.                that they remain cost-competitive.
trying to learn more about their cus-                                                    Competitors regularly enter the market
tomers, yet this is equally important for      Furthermore, some businesses – such       and if they can supply quality goods
the business to know and understand          as those in the food or health indus-       or services at a lower cost, businesses
its suppliers. There are two commonly        tries – need to meet health and safety      need to be aware that these suppliers
made mistakes when it comes to vetting       standards. If businesses in these types     could have a major impact on their own
suppliers, the first of which is failing to  of industries are supplied with products    margins.
thoroughly check a supplier before sign-     that do not comply with regulations,
ing a contract while the other is failing    they are at risk of closure from the          It is clear from the value that sup-
to regularly assess suppliers because of     relevant watchdog authorities and, even     pliers provide – and the risks they can
complacency.                                 more damaging, face health and safety       pose – that getting to know them better
                                             risks for its employees and customers.      is vital to any business’s operations.
  Businesses need to ensure that they        The reputational damage that can arise      Businesses need to empower them-
make use of available credit solutions       from these types of risks can be dev-       selves with information that can identify
                                             astating to a business, which they may      both value and risks associated with
                                             never recover from.                         potential and current suppliers in order
                                                                                         to build the strongest possible supply
                                               A detailed database with up-to-date       chain. This way, they can have peace of
                                             supplier information will also enable a     mind that their suppliers are financially
                                             company to detect if one of its suppliers   and operationally viable, while remaining
                                             poses a risk, such as one which is going    cost-competitive.
                                             insolvent. With access to this informa-

                                             OCTOBER / NOVEMBER 2016 | HOME GOODS RETAILER
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