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Third Party Qualification – Streamlining compliance management

The practice of third party qualification is not a new concept but with the recent fledgling economy and under staffed purchasing departments, more companies are considering third party qualification as a viable alternative. Organizations large are making a shift in an attempt to leverage recent technological advancements and an emerging third party vendor qualification market to minimize potential exposures and avoid lowering their bench marks of quality, while staying competitive in today’s economy.

Traditional Challenges

Businesses and organizations requiring the services of multiple companies have historically expended thousands of dollars annually to manage their internally generated lists with varying degrees of success in the attempt to adequately manage risk. Companies set standards to which vendors must adhere, allocate company overhead and employees to the task of reviewing individual vendor files to ensure files are complete, accurate and updated. The complete process, sometimes requiring multiple full-time employees, is a labour intensive activity and a major cost centre that can hinder financial performance of whatever business unit it falls under. Due to the cost associated with internal compliance management and vendor qualification many organizations in an effort to streamline and cut cost have decreased the number of purchasing managers they have on staff. As a result purchasing agents are becoming overworked and subsequently everywhere you turn the media is filled with reports of steps being missed via mismanagement, neglect and conflict of interest cases.

These miscues are a top-line; mission-critical challenge that requires the attention and commitment of senior-level executives and administrators as well as the dedicated allocation of carefully targeted resources. If executed improperly organizations are faced with conflict of interest liabilities and cost-inefficiencies, both recognized and hidden. Although in some verticals new regulations and internal conflict of interest policies and new document management software is being developed, implementation of these new solutions are being rolled out at an absorbent cost and barrier to entry is excluding some smaller organizations.

Existing top-down policies and procedures fail to provide a viable, verifiable solution for many organizations. As the need for conflict of interest transparency and document management intensifies, management and suppliers face unprecedented demands on their ability to identify, monitor and document these potentially high-risk relationships. Existing policies and procedures for board and administrator level compliance are insufficient. Disparate, incompatible stand-alone systems, where they exist, have proven difficult to implement and costly to integrate, offering little assurance of reliable compliance and no guarantee of the level playing field these requirements seek to establish.

Third Party Solutions and Why They Work!

There is a new solution emerging which is proving to be a mutually beneficial business model in the independent vendor management segment of the software services marketplace, and this systematic solution holds tremendous promise for application to the growing demands for conflict of interest compliance and the ease in which purchasing agents can access integral documents. The two-pronged nature of the solution tackles the need for organizations to provide greater transparency into their business relationships on the one hand, and the vested interest of outside vendors and services providers to comply with these transparency requirements in order to do business with these major customers on the other. The solution demands an integrated, system-level approach. Comprehensive compliance with emerging conflict of interest regulations will require both sides of the customer/supplier equation to work together in assuring across-the-board integration of constantly changing data and rapidly evolving systems upgrades.

While no centralized system-wide solution capable of managing the expanding and evolving challenges of the conflict of interest compliance problem currently exists, this unique business model has fragmented representation across many regions and is slowly proving itself to be a viable foundation for the development of such a full scale solution.

In comparison to current practices at many organizations, third party technology rich solutions offer businesses a more comprehensive and up-to-date vendor list that has enhanced document visibility and increased risk management while providing a significant cost savings. The element of with-in arms reach is taken out of play and many companies can help reduce their exposure to missed steps, mismanagement, and neglect and conflict of interest cases.

In Summary

To address the growing complexity of vendor management and the need to capture, evaluate and monitor conflict of interest disclosures, organizations alike need to work together to build upon the capabilities of vendor relationship management systems to create a centralized all-encompassing solution that ensures conflict of interest compliance.

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