Due Diligence in Supplier Selection

When choosing suppliers, due diligence is a critical step to ensure that the selected supplier can provide high-quality products or services and is reliable and financially stable. Due diligence refers to the process of investigating and evaluating a supplier's business operations, food safety and quality programs, financial stability, and reputation. In this blog, we will discuss the key steps involved in doing due diligence when choosing suppliers.

1. Define your requirements: Before you begin the due diligence process, you need to define your requirements for the supplier. This includes identifying the specific products or services you need, the quality standards you require, the delivery timelines, and the pricing. For more on this see this blog on RFP creation.

2. Research the supplier: Once you have identified potential suppliers, you should conduct research to learn more about their business operations, food safety and quality processes, financial stability, and reputation. You can use various sources such as online databases, industry associations, and company websites to gather information about the supplier.  Having a discussion about quality accreditation and their own testing protocols is recommended early in this process.  

3. Evaluate financial stability: It is important to evaluate the supplier's financial stability to ensure that they can meet your business needs and remain a reliable partner over the long term. You can assess the supplier's financial health by reviewing independent sources like Dun and Bradstreet ratings.  

4. Assess food safety and quality control: The supplier's production, food safety, and quality control processes are critical factors in ensuring that they can deliver high-quality products or services consistently. You should assess the supplier's production facilities, recent audit schemes and scores, quality control procedures, and certifications to ensure that they meet your quality standards.

5. Check references: Checking references is an essential step in the due diligence process. References from the supplier's current and past clients will help you to gather feedback on their performance, on-time delivery, reliability, and customer service.

6. Review contracts and legal agreements: Before finalizing the contract with the supplier, it is important to review all legal agreements thoroughly. This includes reviewing the terms and conditions, warranties, liabilities, and intellectual property rights.  (I would actually move this higher in the list if you have many non-negotiables!)

7. Conduct ongoing monitoring: Once you have selected a supplier, you should conduct ongoing monitoring to ensure that they continue to meet your requirements. This can include requiring participation in a supplier monitoring program.  

Performing due diligence when choosing suppliers is critical to ensuring that your organization selects a reliable and high-quality supplier. By following these steps, you can minimize the risks associated with supplier selection and establish a strong and long-lasting business relationship.