Procurement Due Diligence is frequently mentioned in the South African press regards the ongoing revelations around the PPE corruption debacle, as well as other current and past ones.
Providing the Vendor Selection & Appointment Process is NOT compromised, Due Diligence is vital to any Procurement Executive and their employer organisation to ensure an optimised supply chain. Establishing the process to support Due Diligence on a sustainable basis is a must have for any responsibly managed strategic sourcing function.
Basic Due Diligence eliminates obvious non-suitable supplier options at an early point in the review process of all the available vendor options.
Comprehensive Due Diligence provides the short listing and appointment phases with informed input on “whom and what you are dealing with”, as well as potential “Total value add” to your supply chain over a specified timeframe by each candidate vendor.
If done properly, Due diligence is an exacting process. Its intensity varies according to the importance of the vendor’s role in your supply chain. Due Diligence is generally of more practical strategic value when dealing with start-ups, micro or unknown vendors. Also, it is a useful tool when dealing with new market- players within your “buying space”.
Due Diligence is advisable in certain circumstances where existent supplier organisations experience radical change or buy outs. It can also be useful or adapted within several other scenarios including the procurement side of business rescues.
Ultimately poor vendor performance and buy-in quality will detrimentally effect your personal branding as a Procurement executive and your employer at a customer, corporate and public level (an old eminent example of bad Procurement policies and practices adversely contributing to an international corporation’s poor quality products, negative image and partial collapse, is British Leyland during the 1970s and into the early ‘80s).
Due Diligence involves actioning interlocking measures that results in a continuous over- arching value added evaluation, when dealing with unquantified entities or individuals interacting with your supply operations and ultimately your brand and corporate culture.
Due Diligence is a comprehensive value adding component of the Vendor Appointment Process. More generically it is an ongoing “ease of management’ tool for the entire strategic sourcing functionality. It is about auditing and validating information and credentials, eliminating assumptions and accurate “potential value” analysis and prediction. All of which result in successful vendor relationships and an optimised supply chain.