For businesses engaged in international trade, supplier vetting continues to be one of the most important cogs in the supply chain. The risks of having an inefficient vendor vetting process are magnified in a post-Covid environment, since not being able to vet a vendor properly can ultimately increase the risk of the unreliability of operation, non-delivery crimes, financial frauds, data breaches, and more. 

According to a Deloitte report,¹ 84% of companies have experienced a damaging third-party incident in the last three years. In fact, the same report suggests that 30% of the companies believe that their share prices could fall by 10% or more after an incident if they did not adequately manage third-party risks.

This is where having an efficient supplier vetting process in place can help your business minimize vendor-related risks. At Exporta Wholesale, we understand the care and trust U.S. buyers place on us to perform supplier due diligence in order to ascertain manufacturer reliability with utmost precision. This article will outline the steps Exporta takes to build a world-class supplier network.

Exporta Vetting Process

Thanks to globalized, multi-tier supply chains operating in economically challenging times, the risk of supplier failure in terms of turnover, supply disruption, customer relations and brand perception has increasingly become an area of concern for supply chain managers.

Exporta takes proactive steps to identify and reduce the chances for supplier failure. These checks include:²

Assessing the viability of a supplier in terms of its financial stability is crucial. A strong balance sheet and good cash flow position means that the supplier is better able to withstand variability in revenue streams that may occur.

It is also a good indication of a supplier’s ability in the longer term to execute against investments required to grow its business. Company credit reports effectively provide an evaluation of a supplier’s accounts and more. At Exporta Wholesale, we complete a full financial health assessment that includes late payment history, industry benchmarks, and ratio analysis).

If a supplier forms part of a group of companies, it is important to establish the nature of any sister companies to ensure that they are not at odds with any aspect of the organization’s reputation, or to identify where financial issues in one company could impact the contracting company. 

Furthermore, it is important to understand the nature of any relationship with a parent company to ascertain if the supplier has control over the direction of its own business plan, objectives and investment, as well as the policies and processes to deliver it.

Understanding where contracted goods and/or services will actually be supplied from and identifying any risks or impacts that may be associated with a specific location is essential. This is why at Exporta Wholesale, we visit the factory floor and meet with the people in charge to understand what mitigates are in place in the event any unexpected disruptions such as natural disasters or even terrorist attacks occur. Face-to-face dialogue also helps both Exporta and supplier jointly develop and increase dependency through extracting mutual value.

The value of a contract to a supplier could be an indication of the supplier’s attitude and approach to the relationship over time. A customer preference exercise can be carried out to ascertain the relative value of the business against the attractiveness of the account.

Exporta Wholesale helps buyers work out just how valuable an account is to a supplier by looking at its approach in terms of service and response levels, and driving for the best price and maximum profit to lock in. 

Assessing a supplier’s ability to deliver is also best carried out through direct contact. Exporta Wholesale conducts information requests and site visits that provide us with the information we need to assess a supplier’s resources in terms of staff, technology, equipment and storage to ensure it has enough capacity to handle our clients’ requirements and understand how quickly it would be able to respond to these and to other market and supply fluctuations. 

Supplier compliance is about assessing any pre-requisites for contracting with an organization about sustainability, environmental commitments, ethical values and CSR. Supplier compliance information is acquired at the vetting process.

Ongoing partner relationships must focus on fostering growth in trust and shared information through regular and structured communication.

When carried out in a rigorous and consistent manner, the information obtained as part of our supplier health check process ensures a holistic view of the assessed organization’s current and future validity as a supplier. This information can then be an input into the supplier’s risk profile.

This risk profile is then incorporated into the organization’s overall risk management process. During this process, identification of any issues or opportunities which need to be addressed or simply communicated will provide the insights and information necessary to help maintain a strong and healthy supply chain.³

Conclusion

It’s undeniably more affordable to outsource your product manufacturing to a factory in Latin America. Discerning which factory is the best fit is relatively difficult for most businesses. With the expertise, relationships, and resources cultivated by Exporta Wholesale over the past half decade, we’ve developed a rigorous approach to vetting manufacturing partners. As a result, our U.S. buyer clients can rely on us to help navigate the process, while they focus on what they do best, which is serving their end customers.

We do the grunt work of checking reviews from other clients who have outsourced to the factory. We get in touch with references provided by the suppliers to make sure those clients had a good experience. Our reputation and experience working with factories in Latin America gives us a deep understanding of costs and high expectations on quality. Factories know if they treat Exporta’s customers right, they’ll get more business. 

Exporta Wholesale helps Amazon sellers, brand builders, and growing small businesses confidently navigate the product sourcing process. Click here to learn more about how Exporta works and how to submit an RFQ.

About Exporta Technologies

Exporta Wholesale is the largest marketplace connecting suppliers in Latin America with buyers in North America. Today, we have a network of over 5,000 Latin American suppliers serving a variety of consumer goods and product categories in the United States. 

Exporta’s marketplace offers buyers a full service experience in the origination, sourcing and managing of products. The platform was founded on the idea that curation and service are the most important elements in the buyer’s journey. Exporta’s marketplace is building technology that addresses the pains of sourcing products internationally at attractive prices.

References

1. https://www2.deloitte.com/content/dam/Deloitte/xe/Documents/risk/Deloitte%20Third-Party%20Risk%20Management%20Global%20Survey%20Report%202020.pdf
2. https://supplychaindigital.com/procurement/how-vet-suppliers
3. https://supplychaindigital.com/procurement/how-vet-suppliers