Global supply chains have never been more interconnected, or more vulnerable. From manufacturing to energy, oil and gas, and logistics, organisations rely on a network of suppliers to ensure business continuity. Yet, the same complexity that makes supply chains efficient also makes them fragile. A single unreliable supplier can cause financial disruption, operational delays, or reputational damage that ripples far beyond one transaction.
This is why Know Your Supplier (KYS) processes are becoming essential. At the centre of KYS is data: reliable, verified, and actionable information that provides a true picture of who your suppliers are and what risks they carry. Without data, due diligence becomes guesswork. With data, it becomes a powerful shield against financial loss, compliance failures, and reputational harm.
Why Supplier Data Matters for Risk Detection
Many organisations still rely heavily on self-reported supplier information during onboarding. While useful, these details are often incomplete or unverifiable. A supplier may unintentionally misrepresent its financial health, omit ownership details, or fail to disclose its true operating capacity. Trusting unverified inputs exposes businesses to significant risks.
Independent supplier data changes the equation. By cross-checking what suppliers say with external, credible sources, companies can detect risks early. The benefits of this approach include:
- Risk avoidance: spotting red flags such as poor financial health or opaque ownership before contracts are signed.
- Operational continuity: confirming that suppliers have the scale and stability to deliver consistently.
- Reputational protection: ensuring no association with sanctioned entities, fraudulent operators, or suppliers engaged in unethical practices.
In short, supplier data transforms onboarding from a compliance formality into a strategic safeguard.
The Three Pillars of Supplier Data
Not all information is equally valuable in risk detection. The following three categories of data form the foundation of effective KYS processes:
1. Entity Data
Entity data provides clarity on a supplier’s legal identity and ownership. It includes:
- Company registration details
- Legal status and legal form
- Ultimate beneficial ownership (UBO) structures
- Registry records and corporate linkages
Entity data reveals whether you are dealing with a legitimate business and whether its ownership network exposes you to hidden compliance risks. For instance, a supplier partially owned by a sanctioned entity could trigger regulatory violations if left unchecked.
2. Financial Indicators
Financial strength is one of the best predictors of supplier reliability. Key metrics include:
- Balance sheet health (assets, liabilities, equity)
- Profitability ratios
- Credit ratings and solvency scores
- Payment history and arrears
A supplier under financial strain may cut corners, delay deliveries, or default entirely. By reviewing financial indicators, companies gain foresight into a supplier’s ability to withstand market shocks and maintain obligations.
3. Export and Import Data
Trade data reveals the real scale of a supplier’s business. Import and export records show:
- Volumes of goods traded
- Geographic reach and trading partners
- Reliance on specific markets
- Seasonal or cyclical fluctuations
These insights help verify whether a supplier’s declared size matches reality. For example, if a supplier claims extensive capacity but has minimal recorded trade activity, this discrepancy signals a potential risk to continuity.
Prequalification as a Risk Filter
The prequalification stage is the most effective moment to identify risks. Once contracts are signed, businesses become operationally and financially tied to their suppliers. Detecting red flags earlier reduces costs, avoids disruptions, and enables procurement teams to allocate resources more effectively.
Cross-verification is critical. Instead of accepting supplier-provided information at face value, companies should compare it against verified entity, financial, and trade data. This approach transforms prequalification into a genuine filter rather than a box-ticking exercise.
For example, in manufacturing, a supplier may claim to operate multiple facilities with high production capacity. Import/export data may reveal far smaller volumes, suggesting inflated claims and a higher likelihood of delays. In energy and utilities, financial data can determine whether a supplier can sustain multi-year commitments. In both cases, external validation protects the buyer from costly surprises.
The Cost of Getting It Wrong
The consequences of poor supplier due diligence are not theoretical. Businesses across industries have suffered financial losses, reputational crises, and regulatory penalties because they failed to verify supplier data.
- Financial losses: In 2023, several European manufacturers faced production stoppages when a key supplier in Eastern Europe collapsed financially. Companies that had not reviewed solvency indicators were left scrambling for alternatives, absorbing millions in expedited logistics costs and lost revenue.
- Reputational damage: In the oil and gas sector, partnerships with suppliers later linked to corruption or sanctioned entities have led to public backlash, loss of investor confidence, and long-term damage to brand equity.
- Regulatory fines: Compliance frameworks such as anti-money laundering (AML) and counter-terrorist financing (CTF) regulations impose significant penalties for dealing with sanctioned or high-risk entities. A multinational logistics firm was fined heavily in 2024 after regulators uncovered that its subcontractor was tied to blacklisted companies.
These cases highlight the tangible risks of neglecting KYS. By contrast, organisations that invest in robust supplier intelligence systems gain the ability to predict vulnerabilities, respond faster to crises, and demonstrate due diligence to regulators and stakeholders.
Sector-Specific Applications with Deeper Insight
Manufacturing
Manufacturers depend on a consistent flow of raw materials and components. A supplier’s insolvency or logistical failure can halt production lines, leading to cascading financial losses. For instance, an automotive manufacturer in Asia experienced significant delays in 2024 when a Tier 2 supplier overstated its production capacity. Import/export data later revealed the supplier’s limited trading history, which could have flagged the risk in advance. This case illustrates how early verification can save millions in downstream disruption costs.
Energy and Utilities
Energy projects, whether renewable installations or traditional power generation, are capital-intensive and highly regulated. Contractors often span multiple jurisdictions, each with its own compliance requirements. In 2025, a European energy consortium was forced to renegotiate contracts when a supplier of turbine components was linked to an opaque ownership structure involving sanctioned shareholders. This delayed project timelines and increased costs. Verified entity and UBO data would have revealed the issue during prequalification, avoiding delays and reputational risks.
Oil and Gas
Oil and gas supply chains are uniquely complex, stretching across geographies with varying political and economic stability. In this sector, reputational risk is particularly acute. A Middle Eastern operator faced significant public scrutiny when investigative reports linked one of its suppliers to environmental violations and corrupt practices abroad. Though the operator was not directly involved, the association damaged its global standing. Enhanced supplier due diligence, combining entity checks, sanctions screening, and trade activity analysis, could have prevented the partnership.
Transportation and Logistics
Logistics providers are the linchpins of global trade. Yet, they are vulnerable to financial instability. In 2024, a European freight forwarder abruptly declared bankruptcy, stranding shipments across multiple ports. Businesses that had reviewed its financial indicators, which showed a steady decline in solvency, were able to transition to alternative providers in time. Those without visibility faced costly delays and reputational damage with end customers. This example demonstrates how supplier intelligence protects not only compliance but also customer satisfaction.
Building Resilience with Supplier Intelligence
Supply chain resilience is about more than diversifying suppliers. It requires a systematic approach to supplier intelligence, continuously gathering, verifying, and monitoring data to identify vulnerabilities before they materialize.
Embedding KYS practices into procurement workflows delivers four advantages:
- Streamlined onboarding: Verified data accelerates supplier approval by reducing back-and-forth documentation requests.
- Ongoing monitoring: Regular updates ensure changes in financial health, ownership, or trade flows are detected early.
- Stronger partnerships: Transparent data fosters trust and enables longer-term collaboration.
- Improved compliance: Rigorous due diligence minimises regulatory exposure and reputational risk.
By investing in supplier intelligence, organisations are not only protecting themselves from immediate threats but also positioning their supply chains to withstand global volatility.
Strategic Recommendations for Adopting KYS
Organisations looking to strengthen KYS processes should consider the following steps:
- Standardise supplier data collection: Ensure entity, financial, and trade data are consistently captured across all onboarding processes.
- Integrate external verification tools: Rely on credible data providers to validate supplier claims and provide ongoing monitoring.
- Prioritise high-risk categories: Apply enhanced due diligence to suppliers in sensitive geographies or industries.
- Embed KYS into procurement policy: Treat supplier intelligence as a strategic necessity, not an administrative task.
- Leverage automation and APIs: Enable real-time verification to reduce manual workloads and speed up decision-making.
Turning Data into Supply Chain Resilience
For industries where continuity, compliance, and reputation are non-negotiable, supplier data is not optional; it is strategic. Entity records confirm legitimacy and ownership transparency. Financial indicators reveal resilience. Trade data validates capacity. Together, these insights empower procurement and risk teams to filter out high-risk partners, build trust with reliable suppliers, and strengthen supply chain resilience.
By embedding Know Your Supplier practices into procurement strategies, organisations shift from reacting to disruptions to anticipating and preventing them. Supplier intelligence becomes more than a due diligence exercise; it becomes the foundation of long-term stability and competitive strength.
Organisations that recognise the value of data-driven supplier verification are not only protecting themselves from today’s risks. They are also building supply chains that can withstand tomorrow’s uncertainties with confidence and resilience.
Sources
Coface
- Coface Country & Sector Risk Barometer – October 2024
https://www.coface.com/news-economy-and-insights/from-monetary-pivot-to-fiscal-turnaround-coface-barometer - Coface Country & Sector Risk Barometer – June 2024
https://www.coface.com/news-economy-and-insights/country-and-sector-risks-barometer-turbulence-ahead - Coface Country & Sector Risks Handbook 2024: Major Trends of the World Economy
https://www.coface.com/news-economy-and-insights/coface-country-sector-risks-handbook-2024-major-trends-of-the-world-economy - Coface Business Risk Dashboard (2024 updates by country & sector)
https://www.coface.com/news-economy-and-insights/business-risk-dashboard
Atradius
- Atradius Payment Practices Barometer – US 2024
https://atradius.us/knowledge-and-research/reports/b2b-payment-practices-trends-us-2024 - Atradius Payment Practices Barometer – North America (USMCA) 2024
https://au-group.com/sites/default/files/inline-files/payment-practices-barometer-north-america-usmca-en_0.pdf - Atradius Payment Practices Barometer – Western Europe 2024
https://atradiuscollections.com/us/knowledge-and-research/reports/b2b-payment-practices-trends%2C-western-europe-2024
Global Institutions & Reports
- World Bank – Global Supply Chain Stress Index (2025)
https://www.worldbank.org/en/data/interactive/2025/04/08/global-supply-chain-stress-index - World Trade Organisation – World Trade Report 2024
https://www.wto.org/english/res_e/booksp_e/wtr24_e/wtr24_e.pdf - World Economic Forum – Global Risks Report 2024
https://www.weforum.org/publications/global-risks-report-2024/in-full/global-risks-2024-at-a-turning-point
Industry & Advisory Reports
- EY – How the Great Supply Chain Reset is Unfolding (2024)
https://www.ey.com/en_uk/insights/consulting/how-the-great-supply-chain-reset-is-unfolding - EY – Geostrategy in Practice 2025 survey
https://www.ey.com/en_gl/geostrategy/ey-geostrategy-in-practice-survey-2025 - Thomson Reuters Institute – 2024 Global Trade Report
https://www.thomsonreuters.com/en-us/posts/international-trade-and-supply-chain/global-trade-report-2024 - Sphera – Supply Chain Risk Report 2025
https://sphera.com/resources/report/sphera-supply-chain-risk-report-2025
Governance & Ethics
- Ethisphere – Making Supply Chain Due Diligence Practical (2024)
https://ethisphere.com/making-supply-chain-due-diligence-practical
