Boohoo, the fashion retailer came under scrutiny after it was revealed that one of its suppliers was allegedly failing to pay workers the minimum wage and enforcing social distancing rules. Such stories underline the importance of taking care to check and monitor the companies we do business with. The challenge is how to do it without lengthy auditing?
No one wants to get caught out
As we fight our way back to economic health, people are going to be more and more careful about who they do business with.
- Banks looking at who they will lend to
- Insurers tightening up on what 'risks' they will take on
- Buyers making sure their suppliers are prepared to weather the storm (and in an ethical way)
And it's not just financial due diligence consumers and businesses will be doing on each other: Ethical sourcing and social responsibility is becoming just as important.
KYC meets KYS - Why it's hard!
The days of a purchasing professional just doing a company credit check to satisfy due diligence and ongoing supplier assurance are fading. For some categories of spend it might be adequate, but the expectations today and tools on offer means organisations should be doing more. Just as 'KYC' (Know Your Customer) is becoming a hot area in financial services and other regulated industries, so 'Know Your Supplier' will also become more important. Unfortunately, if you are pressed for time (or resource) to do lengthy searches into a company's practices and reputation, then doing this extra research is hard. For ongoing supplier assurance and audits, the days of tedious spreadsheets to complete or documentation to gather and send have got to be over. We live in a connected world - there are smarter solutions out there to help automate this!
Beyond 'window dressing'
I participated in an episode of 'The Lens' from the Princes Trust 'Business in the Community' organisation last year. Carlotta Giacché, a Coordinating Ambassador for One Young World spoke about how she is aiming to empower millennials to drive the demand for more transparent and consistent information about their investments, reducing "green washing" or "SDG window dressing". I believe the same ideals apply to the companies and people we do business with.
See - and be seen
Investment funds now use 'ESG' metrics (Environmental, Social, Governance) to assess which companies to invest in. But these metrics aren't just for large, FTSE 100 companies. Smaller businesses who can evidence the great things they do in their communities could gain as well. Buyers will increasingly choose which companies they buy from or work with, according to their socially responsible business activities. It's therefore vital that smaller businesses find ways to promote the good things they do - and for buyers to be able to spot them.
Sophisticated buyers will also do a wider search on a company than a pure credit check. Glassdoor for example is a way for employees to rate their employer. A low rating and horror stories can sound alarm bells for someone doing their research about you.
Beyond 'price'
Don't get me wrong, sometimes buyers do just look at the cost. For others, factors like quality, company values, ethical practices etc are entry-level factors that are just expected to make the next stage of a tender. Either way, businesses looking to sell (and be selected) would be wise to consider the way their company is perceived and how it would stand-up to scrutiny.
Continuous monitoring and automated alerting
In an IOT and IIOT world where devices talk to each other and we can get alerts if our credit card has been cloned or our email has been breached, we can also automate company checks and ongoing monitoring.
Public registers of ICO License holders, FCA Authorisations, Cyber Essentials certifications etc exist. So these checks can be automated, and alert the person interested when something is overdue for renewal. Beyond that, there are ways to monitor what is happening within a company you are partnered with.
Beyond a check of publicly available data, tools like Brisk have a partnering feature allowing a supplier or partner to selectively share certificates or policies and provide an audit-trail of checks and updates.
Sure, a supplier needs to consent to sharing these updates, but if collaborating using a shared tool means transparency, time saved for both parties and a stronger relationship... whose arguing?
For more information about the work we are doing with Brisk, please get in touch or visit our Supply Chain page here.
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