Blacklist Suppliers: Most supplier relationships start with good intentions on all sides for a productive engagement that will deliver good outcomes. Yet some supplier relationships, whether contracted formally or not, do not proceed successfully. Difficulties regarding performance, commercial or other issues, can start before the work has even begun. Or they may emerge after many years of effective partnership.
What is “blacklisting” or “Do Not Use” classification?
Increasingly organizations are assigning a “do not use” status to certain suppliers. In some cases this is a “word of mouth” recommendation and in others it’s a formal “blacklisted” or “banned” classification in organizational systems. A DNU classification, as we call it, can be a temporary time bound suspension of engagement (for instance till the supplier clears overdue GST compliances) or a permanent one which may extend for a period of multiple years.
But, it is not all cake.
An apparently simple idea, ‘stop working with bad suppliers’ rapidly becomes a complex and demanding task for companies, one that requires careful consideration and investment in technology.
Implementing a blacklist also requires a significant determination to ensure that the policies and procedures associated with a blacklist are successfully implemented.
We’ll be sharing more on how to implement a successful DNU policy.
7 Reasons why organizations “blacklist” a supplier
- Severe financial instability of the supplier resulting in performance failures
- Chronic poor performance of the supplier due to poor internal controls and training at Supplier end.
- Severe reputational issues associated with the firm and promoters such as Wilful Default on loans, Money Laundering.
- Poor compliance such as chronic defaults in GST payments and most importantly labor payments.
- Failure to meet the buying organization’s code of conduct and expectations on values and ethics.
- Developing Environmental, Social and Governance risks such as litigations pertaining to child labor, forced labor, labor strikes, tax evasion, irresponsible handling of hazardous wastes and more.
- Developing bribery and corruption risks. Undisclosed political exposure, and relationships with internal employees and executives.
Before deciding on such a “ban”, there is often an extended consultation between the buying organization’s end users, budget holders, specification-owners and other stakeholders who are involved in the supplier relationship.
We’ll soon be writing on a checklist tofollow when classifying a supplier as DNU. Use SignalX’s DNU feature to maintain your blacklisted Suppliers and verify relationship with new parties being onboarded.
SignalX’s due diligence checks are more comprehensive than ever with the enhanced statutory compliance module to our Pre-Deal Due Diligence and Supplier Risk Intelligence solutions. Conduct checks on GST, EPFO, and MCA filings to flag off any defaults or delays to safeguard your business against hefty fines, operational and regulatory risks associated with potential partners.
Next month, we’re excited to bring you more updates on how we’re enabling companies to engage in safer business. Till then, write to us at info@signalx.ai or speak to our team to walk you through these new features and their benefits.
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SignalX is purpose-built to help you understand the credibility of the parties you are doing business with and helps you stay compliant with regulatory requirements / internal risk policies through various due diligence checks on any concerned party.
We enable Corporate Compliance and Legal teams to assess potential engagements and streamline business partner on-boarding via an air-tight and easy to use due-diligence automation platform, powered by AI.
