New Supplier Selection Due Diligence Checklist

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11 critical items still open - these are the highest-risk gaps.

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Company and financial standing

Legal entity name, registration number and address verified against official recordsCRITICALOwnership structure and ultimate parent identifiedTwo or three years of financial statements or a credit report reviewedCRITICALDependence on one customer or one product line assessedInsurance certificates obtained for liability and propertyBank details verified through a call-back to a known numberCRITICALSanctions and denied party screening completedCRITICAL

Quality system

Current quality certificate obtained and checked with the issuing body (for example ISO 9001, IATF 16949, AS9100)CRITICALScope of certificate covers the processes you are buyingAudit report or on-site audit completedCalibration control for measuring equipment confirmedCorrective action process and sample 8D or CAPA reviewedIncoming inspection and final inspection method documentedSpecial process approvals held where required by the customerCRITICALSample or first article accepted before production ordersCRITICAL

Capacity and capability

Equipment list matches the part requirementsCapacity checked against your forecast with a utilisation marginCRITICALQuoted lead time validated against current backlogSub-tier suppliers identified and flow-down requirements agreedBusiness continuity or disaster recovery plan reviewedTooling ownership and storage conditions documented

Compliance and risk

Country-specific export, import and origin requirements identifiedCRITICALConflict minerals, REACH and RoHS declarations collected where applicableCode of conduct and anti-bribery commitments signedData security expectations agreed for technical drawingsCRITICALGeographic and single-source concentration risk recorded

Commercial and ERP setup

Price, price breaks, minimum order quantity and currency agreed in writingCRITICALPayment terms and Incoterms rule with named place agreedQuality agreement and purchase order terms signedVendor master record created with approval workflowApproved supplier list updated and item-to-supplier links maintainedScorecard measures and review cadence communicated

Do not approve a supplier for production parts until every critical item is complete. Non-critical gaps can be accepted with a documented action and due date.

Supplier approval workflow in your ERP

Optional: talk through how to enforce supplier approval status and certificate expiry alerts in your ERP.

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How to use the checklist

Work through the groups in order and tick items as you collect evidence, not as you hear assurances. Store the certificate, report or email behind each tick with the supplier file. Critical items are the ones that should block approval. Run the checklist again at renewal or when the supplier changes site, ownership or process. Scale the effort to risk: a catalogue fastener supplier needs less than a machined flight-critical part.

Collect evidence for every tick, not verbal confirmation
Run a lighter version for low-risk commodities
Repeat on change of ownership, site or process

Why these checks

Financial checks reduce the risk of a supplier failing mid-contract. Quality checks confirm that the system exists and that its scope covers your process. Certificates should be verified with the issuing body, because forged or expired certificates do occur. Capacity checks avoid promises the shop cannot keep. Bank detail verification by call-back guards against payment fraud, one of the most common supplier master data attacks.

Common mistakes

Teams often accept a certificate whose scope does not include the process being purchased, such as heat treatment or plating. Others skip sub-tier visibility and learn about a single-source casting vendor only during a shortage. Another mistake is creating the vendor master record before approval is complete, so purchasing can order from a supplier that has not passed review. Make approval status a hard control in your ERP vendor record.

Frequently Asked Questions

How long should supplier due diligence take?

For a low-risk catalogue supplier, a few days of document checks may be enough. For a custom machined or special process supplier it can take weeks, including an audit and first article. Time spent here is cheaper than a quality escape or a supply interruption later.

Do I need an on-site audit for every supplier?

Not always. Base it on risk: criticality of the part, the supplier's certification, past performance and whether a special process is involved. A remote audit or a questionnaire with evidence can suit lower-risk sources. High-risk and sole-source suppliers should be visited.

How do I verify a quality certificate?

Contact the certification body or use its public database to confirm the certificate number, scope and expiry. For aerospace, the OASIS database lists AS9100 certificates. Do not rely on a PDF alone, and diarise the expiry date.

What should be agreed before the first order?

At minimum agree price and currency, payment terms, Incoterms with named place, lead time, quality requirements, first article or sample approval and the governing purchase terms. Write them into the quote acceptance or a framework agreement so both sides work from one document.

Netray can help wire supplier approval status, certificates and scorecard data into your ERP so unapproved suppliers cannot receive orders.

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New Supplier Selection and Due Diligence Checklist