Continuous monitoring of your critical or strategic suppliers is an essential element that drives supply chain resiliency. Early warnings about deteriorating business conditions in your key suppliers can help you mitigate supply chain disruptions through identifying alternative providers, extending or limiting credit and operational exposure.
Prompt identification of unfortunate incidents with critical suppliers such as adverse media on child labor, poor working conditions, bankruptcy or economic defaults, key compliance failures etc, allow you to quickly assess and act to prevent any legal, financial, reputation and compliance exposure to your businesses.
There are 6 essential parameters that top supply chain teams track on their strategic / critical suppliers on a regular basis. Developing a program to rountely check these risk parameters using automation and generating quarterly reports on top at-risk suppliers will help you drive supply chain resiliency and minimize disruptions.
Track the following 6 parameters on your critical suppliers and partners to drive supply chain resiliency.
6 Essential Parameters for tracking of Strategic Suppliers
- Change in ownership, registered address and business fundamentals
When to track: Check every month
How to track: Has there been any change in ownership of the business? Are there any significant churn on the board of the business in case of private limited companies? Has there been change in key shareholders? Is there a change in the registered address of the business? - Compliance Defaults
When to track: Check every month
How to track: Has there been any delay or default in the supplier’s GST filings? Has any of the supplier’s GST registrations been canceled? Has there been a delay and default in the TDS filings of the business? Are the labor payments being made on time? Are there delays and defaults in PF payments. Has the business filed its ITRs and is not a specified business as per Income Tax default records?
- Balance Sheets and Financial Statements
When to track: Check annually
How to track: Has the business filed its latest balance sheet, financial statement and audit reports with the corporate registry? Does the statement indicate deteriorating financial position? - Media mentions
When to track: Check every month
How to track: Are there any new media mentions of the supplier and its promoters? Has there been any adverse media incident such as bribery, corruption, fraud or tax raids etc on the supplier or its promoters? - Drastic Change in Headcount
When to track: Check every month
How to track: Has there been a steep reduction in headcount in the business identified based on its filings? This might indicate a compromised capability in executing the order. - Economic Defaults, Insolvency and Bankruptcy
When to track: Check every month
How to track: Has there been any new incident of litigation pertaining to economic defaults such as debt recovery applications, cheque bounce complaints, insolvency and bankruptcy applications, defaults to financial institutions resulting in the supplier being flagged as NPA and Wilful Defaulters or more?
Track the following 6 parameters on your critical suppliers and partners to drive supply chain resiliency.
- Change in ownership, registered address and business fundamentals
When to track: Check every month
How to track: Has there been any change in ownership of the business? Are there any significant churn on the board of the business in case of private limited companies? Has there been change in key shareholders? Is there a change in the registered address of the business? - Compliance Defaults
When to track: Check every month
How to track: Has there been any delay or default in the supplier’s GST filings? Has any of the supplier’s GST registrations been canceled? Has there been a delay and default in the TDS filings of the business? Are the labor payments being made on time? Are there delays and defaults in PF payments. Has the business filed its ITRs and is not a specified business as per Income Tax default records?
- Balance Sheets and Financial Statements
When to track: Check annually
How to track: Has the business filed its latest balance sheet, financial statement and audit reports with the corporate registry? Does the statement indicate deteriorating financial position? - Media mentions
When to track: Check every month
How to track: Are there any new media mentions of the supplier and its promoters? Has there been any adverse media incident such as bribery, corruption, fraud or tax raids etc on the supplier or its promoters? - Drastic Change in Headcount
When to track: Check every month
How to track: Has there been a steep reduction in headcount in the business identified based on its filings? This might indicate a compromised capability in executing the order. - Economic Defaults, Insolvency and Bankruptcy
When to track: Check every month
How to track: Has there been any new incident of litigation pertaining to economic defaults such as debt recovery applications, cheque bounce complaints, insolvency and bankruptcy applications, defaults to financial institutions resulting in the supplier being flagged as NPA and Wilful Defaulters or more?
