KPMG’s Exploration of Procurement in 2025: Should Picking a Supplier Be Like Hiring an Employee?
In certain cases, suppliers are individuals (if not employees). The 1099 and contingent labor markets are two examples (and certainly some managed services engagements with consultancies begin to look more like the temporary hiring of non-employees than traditional consulting or outsourcing models). But should we treat all supplier “hires” as we do actual employees? In FUTUREBUY: The Future of Procurement – 25 in 25, KPMG makes just such an argument. And it’s an intriguing one.
Specifically, the firm suggests the importance of thinking:
… about hiring a supplier as similar to hiring an employee. Human resource departments spend an extraordinary amount of time conducting due diligence, checking references, qualifying individuals, and explaining the compensation methods when they hire a new employee. But how much due diligence is spent when a new supplier is contracted? In most organizations, it is not nearly enough. For that reason, procurement must be especially careful when they outsource part of their organizational capabilities to a third-party supplier, to conduct due diligence for that supplier early in the decision-making process.
It’s important to consider that “supplier due diligence” is not the same as supplier on-boarding. Nor is it the same as auditing and basic scorecarding or supplier performance management (SPM). If we extend this comparison and way of thinking, perhaps we’ll see a whole industry spring up that matches and evaluates suppliers for organizational fit and capabilities much as the talent management and evaluation suites do in HR today (think SuccessFactors for suppliers).
It’s an important question. But what do you think? We’d welcome some additional voices on this one! And besides commenting, you can download the full KPMG paper if you’re interested in more on the topic.