What I discovered over last couple of weeks is a very big correlation credit and supplier rating. The way how the banks rate customers and how I do rate the vendors (suppliers of services for the companies). However, we have much bigger experience on the credit rating. It’s due to the way how banks operate – data are there.
But, seriously, if you look from the process perspective, there is no big difference.
- Stability of services – when you look at your service provider, you would like just to know if he will be able to keep the services for the longer period of time; so that’s really comparable to the financial condition of the company. We are interested if the company can sell, and can generate revenue. So that’s exactly what it is in the credit analysis world.
- Support processes – you would like just to see the support processes; when you are assessing the company you would like to make sure that the support processes which you will be buying are operational. In the credit and banking world you will also see the back-office processes which are assessed and evaluated during the scoring part.
- Management team – this is the part which is very important, very comparable on both sides.
So, having a conclusion, why we cannot drive a quick metrics same as we have different ratings on the credit side (famous AAA, AA+, BB, etc.)? Why we cannot have very similar rating for the companies and vendors?
Build it by sector, make it operational and just have it very published as public knowledge for the world. It will drive the productivity and also the efficiency that vendors will just drive up in the scale of ratings.