Leveraging Fintech to Supercharge your Supplier or Vendor Assessment
In today’s highly competitive business environment, the effective and efficient selection of suppliers and vendors is one of the most important challenges facing corporations. If a company gets the right supplier or vendor, it can result in a solid and mutually beneficial relationship. If it gets the wrong supplier or vendor, then the results, such as supply chain disruptions, can be costly, sometimes disastrous.
Due to stiff competition, companies are forced to improve the quality of their products and services, reduce operational cost, and appeal for better lead time—and the only way to achieve these is through a supply chain and procurement system that is both fast and reliable.
While some companies are still stuck with a manual system, others have adapted to the New Normal of procurement and supply chain management and embraced solutions made by financial technology companies. With the industry growing at a brisk pace, the competition to become the technology provider of choice for corporate procurement is likewise getting tight.
Vendor and Supplier Assessment
The main purposes of assessing and evaluating suppliers and vendors are to mitigate risks and reduce costs, increase efficiency, and strengthen business relationships.
Vendor and supplier assessment and accreditation are typically carried out using the 10c Model of Supplier Evaluation*.
The 10Cs are Competency, Capacity, Commitment, Control, Cash, Cost, Consistency, Culture, Clean, and Communication. Each of these areas can be used as criterion for assessing the suitability of potential suppliers.
The entire process of vendor and supplier assessment and evaluation takes about nine weeks to 12 weeks: A week or two to prepare (defining basic requirements and creating request for information and request for proposal packages), about one week to three weeks for discovery (conducting research on vendors and suppliers, and distributing RFIs and RFPs), and two weeks to seven weeks of evaluation and selection (evaluating RFI and RFP responses and selecting the top vendors or suppliers).
How Can Fintech Help?
This process can be shortened in the evaluation phase, and consequently in the selection phase, with the help of financial technology, or fintech.
In the 10c Model of Supplier Evaluation, the most costly for companies to determine is Cash. Asking the vendor or supplier to submit audited financial statements, profit and loss statements, balance sheets, and lists of fixed and current assets is not enough. Procurement teams will need the help of an accounting team, or at the very least a skilled financial analyst, to give them a clear picture of the financial health of a vendor or supplier.
This is where financial technology comes in.
With the right fintech solution, companies can:
Scale your vendor pool and quickly gain better access to financially sound vendors and suppliers that can provide better terms.
Pre-screen vendors and suppliers using a tested quantitative metric.
Reduce vendor or supplier risk and cost by meaningfully assessing their financial condition and capabilities.
Avoid surprises resulting from supplier or vendor insolvency.
Expedite accreditation processes through digitization and enabling cloud-based access, anytime and anywhere.
How exactly do you choose a financial technology partner who can provide your company with reports on your vendors and suppliers to help you in the procurement and supply chain decision process?
The Right Solution
Here are a few points you need to consider when choosing a provider of risk management solutions:
No one provider can cover all aspects of vendor or supplier information, so open yourself to the possibility of ending up with more than one provider.
Some providers use old, often outdated, technology—devoid of artificial intelligence, data analytics, and industry benchmarking capabilities.
Make sure to ask the provider for assessments conducted on the efficacy and accuracy of their solution to avoid contracting a provider that can’t deliver your requirements.
Time is crucial so choose a provider that can deliver results in the least amount of time.
Now that you are ready to take the first step toward meeting 21st century procurement and supply chain challenges, it’s time to choose the right financial technology provider.
CreditBPO helps partner corporations make procurement and supply chain decisions with real data by benchmarking your vendors and suppliers in key financial metrics. This will not only help with sound decision making but also with the reduction of operational costs and risks in procurement.
The CreditBPO Rating Report© is the only solution that can analyze your vendor and supplier data with consistency and comparability, free of subjective and cognitive biases, deliver results within 24 hours to 48 hours, and provide you with proof of its efficiency and accuracy, thanks to its algorithm.
Implement this transformational change in your procurement and supply chain processes today. Schedule a call with us and we will walk you through how you can leverage and make use of what financial technology offers through CreditBPO.
* Ray Carter / DPSS Consultants