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How to draw the correct conclusions from suppliers' financial figures – or pull the emergency break

Uncertain markets, intensifying competition and fluctuating order situations are just a few of the many risk factors that may adversely affect the economic situation of a company.  One of the biggest potential dangers in purchasing involves sole dependence on key suppliers: if a Tier 1 short-term supplier has problems, it can rapidly put the entire supply chain under pressure due to close linkage with suppliers. Unforeseen events such as natural disasters are beyond control, but a supplier failure due to their inability to pay is the responsibility of purchasing. But are bankruptcies really unpredictable? Or are they often overlooked – because purchasing lacks the tools and knowledge to monitor supplier risks and systematically incorporate them into their risk analysis?

 

1 + 1 = Security

Protection from supplier failure is a perennial favorite for any strategic purchasing. Very few companies, however, are already using consistent scoring modules for risk management in order to monitor the company situation of their suppliers along the supply chain and evaluate the results. Changes are often the first indication of serious economic problems of a supplier. Because of this, current and objective information on existing and potential suppliers are the basis for every professional risk management. To avoid the high costs of bad investments, possible threats should therefore be identified and evaluated early on. One of the most established providers of scoring models and financial data is Bisnode which is the largest partner of Dun & Bradstreet and part of the worldwide D&B network (D&B WWN). The company also provides information and solutions for early identification of supplier bankruptcies, which are specifically designed for purchasing requirements. Purchasers can regularly check the financial status of their suppliers to minimize supplier risk.  

Adequate indicators are meaningful for risk analysis and should be understandable to every employee – and they are an indispensable part of every 360° Supplier Cockpit. Clear representation of internal and external supplier data on one portal helps you to always keep an eye on the suppliers' financial situation. At the end of the day, it is crucial that purchasing not only recognizes the risks but also draws timely conclusions – or pulls the emergency brake! 

360° Supplier Cockpit

Through an exclusive partnership with Bisnode, POOL4TOOL users have the ability to integrate selected information services as needed, directly to their suppliers and risk management, and use this for strategic decisions in purchasing, for example in supplier approval and evaluation processes. With this you can access detailed B2B company and financial information online from over 200 million companies worldwide. Standardized interfaces ensure a quick and easy connection to valuable information from Bisnode to POOL4TOOL. 

 

The following processes are supported by POOL4TOOL:

  • The new supplier database (name, address, …) is checked during the registration process. Particularly relevant is the data check for companies in Russia or China. A change in the law requires that the company name of a Chinese or Russian company must be listed in the local language (Mandarin or Cyrillic).
  • Similarly, the financial situation of the supplier can also be checked during the registration process using Bisnode data. If the candidate does not meet requirements, the system automatically excludes them from any further processing. This allows purchasing to avoid starting a business relationship with a financially vulnerable supplier, thus minimizing the risk of failure.
  • A periodic check of the financial status of a firm is recommended for each Tier 1 Supplier. Purchasing trends in payment behavior and the financial situation can be quickly recognized. Flexible adjustable warning workflows automatically warn of negative trends.
  • The representation of the entire corporate structure of suppliers ensures greater transparency for group integration. Global Ultimate D-U-N-S® provides the financial status of the entire network of companies, including all branches and subsidiaries, and allows for conclusions about its suppliers. Similarly, bundling effects can be achieved, whereby all the relationships in the parent company are made transparent and put to use.