Value Proposition #3: Credentialers

(This is the third in my seemingly never-ending series of posts on the nine value propositions offered by B2B platforms/multi-sided markets.)

Value Proposition #3:  Credentialers

Credentialers provide risk management and compliance information and services.  In particular, credentialers help buyers assure that their suppliers meet the requirements a buyer has established for doing business with them.  These requirements can relate to one or more of many dimensions:

• Financial
• Physical
• Diversity
• Safety
• Security
• Regulatory
• Quality or
• Social responsibility

In most cases, credentialers help buyers collect and monitor credentials supplied by the supplier, in part, by providing suppliers with a self-service portal for providing such information and keeping it up to date.  Credentialers exist in almost every industry and risk management domain.  They can also exist at several levels within a given supply chain:

• Company level
• Plant/Facility level
• Product level or
• Employee level

The right level will depend on the risk profile of that industry.

Examples:

Credentialers include:

• Financial credentialers: companies like D&B who assess the financial risk associated with suppliers or clients.
• Diversity credentialers: such as CVM (now part of Kroll) or AECSoft (now part of Sciquest)
• Safety credentialers:  such as ISNetworld or PICS Auditing and many more companies who work in capital-intensive industries.
• Social responsibility or “Green” credentialers:  such as EcoVadis or Sedex.
• Personnel credentialers: Vendormate serves as credentialer of healthcare employees who enter hospitals and many firms provide background checks of employees.

Strategic Issues Facing Credentialers

Credentialers face several strategic issues:

1. Credentialers have to decide exactly how much value they want to add in the credentialing process.
   • Is the credentialer simply a repository for self-reported credentials from suppliers (e.g., certifications, test results, safety plans, etc.)? or
   • Will the credentialer verify the authenticity of these documents and attestations?
   • Will the credentialer verify quality, or provide ratings, and if so, according to what standard?  Will the credentialer create their own standard or rating system or is an accepted standard already in use?

The more involved the process of credentialing, the higher the expense, but the greater the value add.  Repositories, alone, do not a risk management strategy make–or as Ronald Reagan said, “trust, but verify”.

2. Credentialers must decide how many dimensions on which to credential suppliers.  No buyer wants eight different portals their suppliers need to go to fill out information, but some of these dimensions are very specialized and require considerable domain knowledge to get right.  A credentialer has to decide where to invest, where to aggregate, and where to integrate with other data sources.

3. Credentialers must decide which side of the market to charge for their services.  Some buyers want to minimize perceived friction for their supply base to provide the this information and these buyers therefore prefer to pay on behalf of suppliers.  Some credentialers provide enough value to suppliers in their industry, in terms of buyer exposure and a “seal of approval”,  that suppliers will readily pay to provide the information once and be able to syndicate this information to an entire industry.

4. Finally, credentialers must decide whether to get into the matchmaking business.  Once a credentialer has a great database on risk and quality of suppliers, buyers may want to search the database for new suppliers.  On the other hand, this supply chain data can be very sensitive and strategic to each buyer, so sharing may be frowned upon.

As the basics of supply chain automation (value proposition #1) have progressed, many forward thinking enterprises have turned their attention to this aspect of their supply chain, making this type of B2B platform one of the fastest growing .  As the cost of recalls and poor press generated by bad actors in the supply chain (e.g., sweat shops in Bangladesh) has risen, enterprises with valuable consumer brands are turning their attention to how the cloud can help tackle risk and compliance management .

Up next, the fourth B2B platform value proposition:  industry catalogs.