Third Party Supplier Management: ABAC Obligations & Other Advantages

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Irrespective of which business you are in, in all likelihood you are working with third-party organizations. Third party supplier management can be a useful tool to grow your business and reduce costs however you must balance the benefits of third parties with the potential pitfalls and risks that they present, both from a legal and reputational perspective.

Attributes of a third party supplier management are described in three parts:

Adhere to ABAC Obligations

The ABAC or Anti-Bribery/Anti-Corruption obligations are provided under a number of laws one of which being the FCPA (Foreign Corrupt Practices Act). With increasing focus on ethics and corruption, it is very important for you to conduct due diligence screening of your existing third-party suppliers to safeguard against risks that can snowball into huge complications for your business. To ensure compliance to the ABAC obligations, close monitoring and collaboration should exist between both sides throughout the relationship. To make sure the third party supplier management is effective, the following should not be skipped

  • Risk-based due diligence
  • Identification of third parties deemed “high risk”
  • Reporting for internal and external stakeholders
  • Rationale for doing business with “high risk” third parties and safeguards put in place to mitigate identified risks
  • Proof of objectivity and appropriate oversight
  • A consistent approach
  • Ongoing monitoring

Effortless integration

There are certain things you would expect to be taken care of when engaging in third party supplier management. Some of these are :

  • Procurement strategies
  • Supplier selection policies
  • Supplier relationship management policies
  • Supplier management policies
  • Supplier risk management policies, etc

Such management could be done in different ways depending on size and the complexity of the services. It is essential to understand that here relationship management is the key to ensure links are maintained and any operational issues are addressed, swiftly.

Reduce costs and improve margins

Getting reduced costs is one of the reasons why organizations prefer going for third party supplier management. Through demand forecasting, the appropriate rate of replenishment can be determined accurately. This reduces the cost that remains in the inventory for a long time wasting resources. Smart spending on the replenishment of inventory improves the cash flow of your business. Hence, helping improve margin and reducing costs, profiting you in the long run.


In order to minimize the adverse impact of third-party risk on the performance of the business, companies are taking more comprehensive measures to ascertain that their third-party suppliers are not only compliant with regulations pertaining to bribery and corruption but also maintain a safe and healthy work environments, avoid unethical practices and overall can strengthen the security of their supply chain and maintain the quality to the highest standards.

James is a blogger who loves to explore new things. His passion for helping people in all aspects of daily things flows through in the respected industries coverage he provides.

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