What is the main purpose of conducting due diligence in procurement?

The primary purpose of conducting due diligence in procurement is to verify supplier claims and ethics. This process involves a thorough investigation and assessment of potential suppliers to ensure they meet specific ethical standards, regulatory requirements, and claims they make about their operations and products. This verification is crucial for several reasons: it helps mitigate risks associated with fraud, ensures compliance with legal and ethical standards, and contributes to building a sustainable supply chain. By confirming the integrity and reliability of suppliers, organizations can make informed decisions, foster trust, and align procurement practices with their ethical values and objectives, ultimately leading to stronger and more resilient supplier relationships.

While enhancing supplier relationships, streamlining purchasing operations, and reducing inventory costs are important aspects of procurement management, they do not capture the fundamental objective of due diligence, which centers on the validation and ethical assessment of suppliers.