Best Practices for Supplier Vetting That Will Future-Proof Your Chain

As discussed in our previous article, traditional supplier surveying methods can’t keep up with today’s rapidly changing landscape. Despite being touted as a proactive method for risk assessment, one-time supplier surveying (and their annual follow-ups) often leave companies vulnerable to market changes. 

These risks include lack of visibility into global events that occur between surveys, such as political unrest, labor strikes, or natural disasters. They also hide changes the supplier might undergo over the course of a year, including cybersecurity attacks, bankruptcy, or ending up on a government sanctions list. 

In today’s world, risks are fast and dynamic. A supplier that could be counted on yesterday might lead to product getting seized at the border tomorrow. If companies want to shore themselves against risk on an ongoing basis, they need to reimagine their supplier surveying process. 

Here are some best practices companies can adopt to build an effective, timely, and dynamic risk assessment program for their suppliers. 

Best Practices for Supplier Vetting

1. Improve Your Supplier Auditing Process

Companies should conduct regular audits to ensure that suppliers are continuously meeting their compliance, quality, and ethical standards. This process helps identify gaps or potential risks in a supplier's operations, allowing companies to address issues proactively and maintain high performance over time.

To effectively do this, companies need to know what information they need from suppliers. Supplier survey fatigue is real, and an unfocused survey that doesn’t know what it wants will not achieve much. 

Companies should think of surveying like an archaeological dig. The initial survey might uncover the rough outline of the outline of the surveyor (much like an archaeologist might uncover an initial artifact and the general perimeters for the excavation), but subsequent surveys should reveal sharper and clearer details about the supplier. This includes details like their financial health, ties to sanctions lists, cybersecurity history, supplier code of conduct, and more. 

As each new survey goes out, it should look to fill in gaps of a supplier assessment rather than just repeat the basics. Or only focus on the production side of things. 

2. Harness Data Collection Methods Beyond Supplier Surveying

Suppliers can no longer be the only source of truth when it comes to gathering info for a risk assessment. Suppliers have good reason to show themselves in the best light. It’s on companies to look past the sheen and uncover the risks around who they work with.

To effectively conduct due diligence on suppliers, companies need to look to alternative methods for timely and accurate data gathering. The right data sources should:

1. Offer deeper, more qualified insights into a supplier.
2. Provide updates in real time for ongoing monitoring.

That said, collecting more data is meaningless if it isn’t reliable. Companies must choose dependable, well-maintained data sources that ensure accuracy. Real-time updates are especially important, providing visibility into emerging risks as they occur.

This is where technology makes the difference. Supplier management software and risk assessment platforms can streamline the process by providing real-time visibility into a supplier’s financial health, production capabilities, and compliance status. These tools use analytics to track key performance indicators (KPIs) and flag potential risks, helping companies uncover issues ranging from factory fires to sub-tier suppliers flagged on sanctions lists.

With this external intelligence, companies can proactively monitor suppliers and refine their audit processes. By asking fewer, more targeted questions in surveys, businesses can minimize supplier fatigue, improve response rates, and efficiently fill gaps in assessments—without redundancies or over-reliance on supplier-provided data.

Adopting a tech-enabled, proactive approach to ongoing vetting allows businesses to build more resilient, accountable, and trustworthy supply chains. By leveraging technology to adapt to changes and mitigate risks before they impact operations, companies can ensure their supply chain remains agile and robust in the face of uncertainty.

3. Foster More Transparent Communication with Suppliers

Turning to alternative data sources doesn’t mean abandoning supplier relationships altogether. Those are still vitally important. The difference is they become an ingredient to a successful supplier risk assessment rather than the whole of it.

Transparent communication with suppliers is crucial for building trust and fostering collaboration. Open lines of communication not only allow for quick resolution of issues but also create opportunities for a more collaborative approach to tackling challenges. Companies must go beyond addressing immediate concerns and articulate their long-term goals—whether focused on ESG initiatives, production benchmarks, or supplier relationship objectives.

When suppliers have a clear understanding of a company’s vision and expectations, they can align their efforts to help achieve shared objectives. This proactive alignment strengthens partnerships and ensures suppliers are invested in the company’s success.

By combining clear communication, regular audits, and technology-driven monitoring, companies can enhance supplier vetting with continuous risk assessment, early warning systems, and aligned strategies. This holistic approach creates a supply chain that is not only resilient but also built on strong, collaborative relationships that drive mutual growth.

Taking the Next Steps in Supplier Vetting 

Z2 Solutions

Z2Data offers several modules to help customers monitor not only their Tier 1 suppliers but also their sub-tier supply chain. Our solutions simplify the process of ongoing supplier monitoring, eliminating the time, expense, and hassle by streamlining it into email alerts and easy-to-use dashboards for tracking key aspects of your supply chain. Read on to learn how each module supports ongoing monitoring: 

Get Comprehensive Data with Supplier Insights

Z2Data’s premier supplier monitoring tool, Supplier Insights, offers a comprehensive suite of evaluation and monitoring features. Track sanctions risks affecting both Tier 1 and sub-tier suppliers. Evaluate suppliers using publicly available data on financials, litigation, sustainability, and more, combined with customer data to generate real-time scores. This empowers decision-makers with the insights they need to make informed supply chain decisions.

Map Supply Chain Vulnerabilities & Risks with Supply Chain Watch

Z2Data’s Supply Chain Watch tool enables customers to map their global supply chain footprint and monitor it in real time for potential disruptions. With site location data down to fabrication and assembly facilities, this tool provides full visibility into your Tier 1 suppliers’ manufacturing sites for the specific parts you source.

Generate country dependency reports, identify outsourced manufacturing locations producing your parts, and set up alerts for external events that may impact your manufacturing sites. Stay ahead of potential downstream shortages and lead-time increases with actionable insights.

To learn more about how Z2Data can help you create a dynamic risk assessment for your supply chain, contact us for a consultation.

Conclusion

In today’s rapidly evolving supply chains, relying on initial supplier vetting is no longer sufficient to ensure long term success. Continuous vetting and monitoring are essential to managing the growing risks from regulatory changes, ethical concerns, unforeseen events and fluctuations in quality. 

By adopting a proactive approach that includes regular audits, leveraging data-driven technological solutions, and fostering transparent and ongoing communication with both direct and sub-tier suppliers, companies can build more resilient, reliable and compliant supply chains. In a world where supply chain disruptions can have far-reaching consequences, staying vigilant and adaptable is key to maintaining operational excellence and safeguarding long term business success.