It’s essential to intimately understand your suppliers – here are 5 ways to achieve this

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The recent news that fashion brand Boohoo is being investigated for bad working practices has forced many businesses to question how much they really know about what is going on in their supply chains. Some retailers, such as Next and Asos, who stock Boohoo clothing, have taken matters into their own hands and have dropped the brand entirely.

Since these allegations came to light, Boohoo has ordered an independent review into what happened, but the claims have come at a significant cost to the brand’s reputation and to its collaborative commercial relationships.

Businesses must know what is happening in their supply chains and ensure full transparency to mitigate against risk. However, with many organisations reliant on thousands of suppliers, trying to ensure everyone is compliant and operates ethically is a challenge.

The supplier relationship management process needs to begin from the outset of any supplier agreement and should be an essential part of the onboarding process. Failing to adequately vet suppliers could store problems for the future.

 

These key questions to ask suppliers will help you adequately assess your vendors :
  1. Check your ethics

The situation with Boohoo has once again reminded us of our duty as consumers to shop responsibly. The realisation that poor working conditions also happen in developed nations like the UK is likely to encourage shoppers to be more mindful about the real cost of the items they purchase.

It is therefore imperative that businesses ask their suppliers about what they do to ensure good working conditions for their employees. Also, find out what measures they have in place to ensure the vendors they work with do the same. Responsibility for this needs to cascade down the supply chain.

Finding out if the people you work with adhere to the Modern Slavery Act 2015, for example, is incumbent on you as a business. Vendors should be prepared for an unannounced site visit at any time, and this can be agreed at the start of the working relationship.

 

  1. Are your supplier’s finances in order?

If a key supplier goes bust, the ramifications can be far reaching and negatively impact your business if supplies of key products dry up. It is therefore important to know if the businesses that provide you with goods are financially stable. This is an essential question to ask at the start of the onboarding process, to avoid issues further down the line. A frank and open discussion with your supplier up front could help encourage a transparent relationship from the outset. If there are concerns over their financial viability, consider offering a short-term trial contract initially.

 

  1. Understanding your suppliers’ processes

Question a new supplier about their set up, and the systems and processes they have in place to support staff and ensure delivery of the goods and services you would like them to provide. Better yet, pay them a visit to inspect their facilities so that you can see for yourself how things are run.

 

  1. Ask how your supplier handles disasters

What do you know about your suppliers’ supply chain? Any bad practice could indirectly reflect badly on your business, so you need to understand as much as you can about their vendors.

You need to know how robust their supply chain is. Can they continue to support you if circumstances change and you need to increase or decrease your order? Also, ask questions about their disaster recovery plans. By agreeing to work with them, they become part of your supply chain and you need guarantees that they can continue to deliver as promised if things go wrong e.g. fire, flood or total system failure. If they are unable to reassure you of their recovery plans, consider an alternative supplier.

 

  1. Customers

Find out as much as you can about your suppliers’ other customers. Do they have one or more major customers? If a supplier relies heavily one or two customer relationships and they suddenly come to an end, where does that leave you? Will the supplier be able to remain in business and continue to supply to you?

 

Supplier relationships need to be fostered over time. They aren’t something you strike up initially and revisit in 12 months or whenever your contract is up. Indeed, the best partnerships are those that are worked on over time, with mutual respect. Supply chain transparency is vital and there are no excuses for not knowing or choosing to ignore the processes and practices involved in the creation of the products or services you sell.