The Importance of Automated, Real-Time Supplier Risk Mitigation
Procurement Risk Mitigation Overview
The modern supply chain is a complex and diverse place. Businesses that use third-party suppliers face a monumental task with the onboarding, verification, and maintenance of supplier information across both manual processes and disparate systems. The need for better procurement risk mitigation solutions has only grown as modern companies are relying on hundreds to hundreds of thousands of suppliers to operate their businesses.
Supplier management software has become a crucial component of enterprise technology stacks as businesses manage a growing, diverse ecosystem of suppliers. According to IBM, as much as 50% of a company’s value depends on its supplier relationships, highlighting how critical this is to both procurement and overall business success.
The complexity of your supplier management process can cost your business countless hours and resources, which is why many enterprises are turning to Bedrock. Bedrock is a centralized supplier management platform that helps businesses onboard new suppliers in minutes, mitigate supplier risk, and digitize supplier payments while fostering collaboration across the partner ecosystem.
Bedrock’s features allow companies to automate this critical component of their procurement process using real-time automation technologies powered by artificial intelligence. These features provide enterprises reliant on external suppliers with significant business advantages, all while mitigating several crucial risks. Let’s look at why an automated, real-time supplier risk mitigation platform is a vital component of supplier management.
Meet Regulatory Standards
A lack of clarity across the supply chain can have a significant impact on business success since there are countless regulations that govern most industries. Compliance with government regulations at a local, national, and international level isn’t just a matter of ethics, it is fundamentally important to the long-term survival of a business. Regulators are tasked with ensuring companies are ethically manufacturing their products, factoring in labor laws, sustainability practices, and more. These regulations, which are ever-changing and often complex, are vital to be aware of and follow.
Regulatory procedure requires businesses to have robust record-keeping, an acute awareness of the relevant laws, and a high-level understanding of their suppliers. If companies don’t follow regulatory procedures and comply in critical areas they risk fines, reputational damage, and significant legal action. If breaches of industry regulations are severe enough, you are subject to massive financial penalties and lost business.
A platform like Bedrock with risk prevention features can help businesses ensure they have a transparent, safe supply chain that is compliant and efficient. Bedrock’s Verify platform uses 60+ governmental agency checkpoints to verify that suppliers are above board and is a crucial onboarding tool for enterprises that want complete visibility into their procurement network. It removes the need for laborious manual processes and automates this entire procedure for businesses, helping them meet regulatory standards without the same required time investment.
Maintain a Strong Public Image
While failing to comply with regulations can lead to significant fines and legal trouble, there is a second potential risk that companies can encounter when they fail to maintain supplier integrity. More and more frequently, companies find themselves victims of public relations crises caused by sourcing from unethical suppliers. Whether these suppliers are engaging in environmental malpractice, violating labor laws, or working with sanctioned governments or entities, the backlash from the public can be swift and decisive. This can quickly lead to a tainted brand image, declining sales, and significant partner backlash.
The biggest reason for this is the modern consumer’s focus on ethically sourced products. Today more than ever, consumers expect brands to source their products sustainably and will willfully withhold their business if brands aren’t meeting their expectations. According to a Forbes article citing a survey of 25,000 consumers, 81% of respondents stated they believe purchasing ethically sourced products matters, and 83% of respondents indicated that they would be willing to pay more for ethically sourced products. Conversely, a Mintel study revealed that 56% of US consumers are willing to stop shopping from brands they perceive as unethical.
Once a brand starts to be perceived as unethical, it is a long, difficult road to redemption in the eyes of consumers, especially if it is publicized. Contrarily, having a fully transparent and ethical partner ecosystem is a strong selling point to the modern consumer. With automated supplier risk prevention, brands can be sure that their business operations are ethical and risk-free. Consumers want to shop from businesses that align with their values. With strong risk mitigation in supplier management, brands can ensure they are aligning with their target customers.
Avoid Bad Actors
The global supply chain is massive, and as we’ve discussed, businesses can often have thousands of suppliers spanning every corner of the globe. While having a global footprint is often seen as advantageous, it also opens businesses up to vulnerabilities. As your supplier network expands, there is an increased risk of utilizing bad actors worldwide. Inadvertently partnering with untrustworthy suppliers exposes your business to serious risks, including financial loss and fraud. Despite this problem being well known, many organizations still struggle with fraud detection at such a large scale due to manual data checks and limited resources.
Having nefarious actors in your supply chain can lead to financial, legal, and social risks in addition to more evident delays and bottlenecks. This is a problem that many businesses deal with the more they grow. The more suppliers you have, the harder it is to verify that they are legitimate, making it even more vital to ensure that your supplier information and master data list are validated across third-party sources. Managing operational efficiency with a vast supplier network can be a challenge without the right tools at your disposal.
Using automated supplier onboarding and verification can help protect organizations from major risks. Incorporating supplier management technology that can be scaled to handle the needs of a vast supply chain allows enterprises to ensure they are only partnering with trusted establishments. Bedrock’s risk prevention and supplier data validation features provide enterprises with a heightened level of understanding of their partners and operations, helping to combat fraud and other supplier disruptions.
Improve Data Clarity & Visibility
Ultimately, the foundational component of procurement risk mitigation is complete clarity and visibility into supplier master data. Most larger enterprises have purchasing departments and external partners conducting business across the world, meaning there are numerous stakeholders involved in the supplier management process. As companies continue to rapidly scale and employee turnover becomes more common, supplier master data tends to become less organized, inaccurate, and difficult to manage. Along with these issues, it becomes increasingly difficult for procurement and accounts payable leaders to maintain a golden record of master data.
Transparency is an asset for businesses because it allows them to ensure that they are following regulations and avoiding bad actors. This also helps them connect to customers that prioritize ethical sourcing and sustainability. Full transparency is something every business with a significant volume of suppliers should be working towards, but most struggle to access the necessary data concerning their supplier network.
Research from the Harvard Business Review shows that increasing transparency in the supply chain increases sales, consumer trust, and can drive improved employee satisfaction. Offering clarity to customers is important, and is something that resonates, and the impact of clean supply chain data is also significant for businesses. But collecting data on a diverse network of suppliers and presenting that data to customers and team members requires significant organization and a lot of manual effort without the right tools.
For businesses to have supply chain visibility for both internal and external shareholders, a digital solution like Bedrock goes a long way. Bedrock has features that provide enterprises with real-time, up-to-date data on their suppliers, improving visibility and transparency. Even with a massive network of suppliers, Bedrock allows businesses to stay up-to-the-minute with data insights helping enterprises meet customer demand for transparency.
The Bedrock Procurement Risk Mitigation Difference
The world of supplier management has evolved rapidly as more businesses across the globe expand their supplier network. Companies now find themselves trying to navigate an ecosystem of thousands of suppliers while striving to maintain ethical sourcing and regulatory compliance. In this environment, it is more critical than ever that enterprises employ supplier management solutions that make overseeing this network more efficient and less time-consuming. This is where Bedrock thrives.
Bedrock is a centralized platform that enables businesses to handle real-time supplier onboarding, risk prevention, audit recovery, data cleansing, and payments via an all-in-one solution. This combination of features has garnered the attention and use of Bedrock’s services for some of the largest Fortune 500 companies in the world. Bedrock’s automated banking verification and risk mitigation platform helps businesses combat the risks commonly associated with complex procurement and AP processes.
Consumers demand ethical production from the businesses they source from, and supply chain transparency is how businesses meet this demand. With Bedrock’s automated risk prevention features, businesses can spot potential risks from suppliers before they happen. They can gain a higher understanding of their business and build a more ethical and efficient network of suppliers, making Bedrock the ideal supplier management solution for the modern enterprise.