Risk Mitigation Requires Thorough Prequalification

Aug 05, 2016

Most companies work hard to reduce risk from their supply chains, as problems can slow down production, cause logistical headaches, and potentially hurt profits.

It's essential for all companies to ensure they're actively involved in removing risks from all aspects of their supply chains that can be detrimental to business, which includes not only suppliers, but third-party contractors. This makes contractor prequalification essential.

A new report from the Retail Industry Leaders Association and Auburn University exposed the best and most creative practices big brands are using to mitigate risk throughout their supply chains, and why it's critical to ensure contractors are sticking to guidelines.

Some major companies are extremely concerned that their reputations of being environmentally friendly businesses will be tarnished if they're caught working with manufacturers that don't hold the same ideals.

Many companies are riding a wave of positive publicity after announcing sustainability initiatives, and if suppliers fail to comply with the same standards, it could come back to reflect poorly on a corporation. The threat of this scenario makes compliance absolutely essential for both hiring companies and their contractors.

To eliminate some potential suppliers and third-party service providers right off the bat, companies are getting creative. They sometimes require manufacturers or suppliers to complete quick surveys to gauge whether their general statements fall in line with a big corporation's sustainability guidelines.

However, basing supplier relationships off a concise survey isn't optimal for reducing supply chain risk or ensuring contractors abide by set sustainability policies. While it may be one way to narrow the pool of potential partners, it isn't always reliable and potential problems can easily be missed.

Businesses that want a thorough prequalification of their suppliers can use BROWZ to help qualify potential partners when implementing a contractor verification system.

By using BROWZ, hiring companies can be certain their contractors don't have violations that contradict the information they provide. This partnership can also enable firms to verify that contractors abide by the hiring company's set guidelines and have sustainability practices in place.