Due Diligence
Supplier due diligence
Check the seller, production route, comparable customer experience and product evidence before committing to a supplier order.
Supplier due diligence tests whether a proposed supplier is credible for a particular order and which claims still need evidence. For an Australian buyer, check the contracting business, proposed production route, comparable customer experience and evidence for the goods. Record what each check establishes before you commit.
Start with the proposed order
Write down product version, quantity, destination, timing and features that would make the order unacceptable if wrong. Identify who will quote and invoice, who will make or supply the goods, and any intermediary between them. Ask who can approve a change of producer or production site.
A supplier may have delivered a standard item but hold no evidence for your modification. A legitimate seller may also rely on a producer it has yet to select. Keep those questions separate.
Judge whether a supplier's experience is relevant to the order's requirements, rather than treating time in business or scale as proof of suitability. Business.gov.au notes an experienced supplier may suit a long-term contract, while a new supplier may offer more personal service as your business grows.
Step-by-step supplier due diligence process
- Define order requirementsProduct version, quantity, destination, timing, unacceptable features
- Identify all parties involvedWho quotes, invoices, produces, and intermediaries
- Verify business credentialsCross-check ABN, ASIC, and registered business names
- Trace the production routeConfirm site, process, and potential changes
- Validate product claimsMatch evidence to claims (e.g., origin, safety, environmental impact)
- Make decision based on evidenceRecord gaps, assign owners, and confirm agreement before ordering
Assess commercial fit for this order
Compare more than the quoted price. Affordability matters, but business.gov.au cautions a cheap supplier may not offer value if poor quality or compromised service damages your reputation. Reliability, supplier size, time in business and location are also comparison factors.
Consider whether the supplier's resources and systems suit delivery of this order if something goes wrong; a smaller supplier may offer a closer relationship. For overseas supply, allow for potentially longer delivery times, higher freight costs, extra fees and customs duties.
Comparing supplier suitability: experience vs. value
- Experienced supplier
- Better for long-term contracts; established processes
- New supplier
- May offer more personalised service and flexibility
- Lowest price
- Not always best value—risk of poor quality or service
- Smaller supplier
- Closer relationship and quicker responsiveness possible
Check the business behind the offer
For an Australian entity, compare the name and identifiers on its quotation with ABN Lookup and, where relevant, ASIC's business names or company registers. Check whether the invoicing name and registered holder fit the supplier's explanation. Resolve any mismatch; do not assume similar names identify the same business.
An active ABN confirms the registration is current. It does not establish commercial viability, factory control or likely performance on your order. ABN Lookup also warns its public information may be incomplete or out of date.
For an overseas entity, identify an appropriate register in its jurisdiction, if available, and establish what that register actually confirms. An Australian reseller's ABN does not verify its overseas producer.
Establish the production route
Ask for the name and location of the site proposed for work that matters to your order, what happens there and what passes to another site. Establish how that site connects to the seller and whether it may change.
Supplier documents, photographs or a video call can help investigate a specific point, but record their date, source and limits. Seeing equipment does not establish that the site will make your goods or has capacity for the order.
If the seller cannot disclose the producer, ask when it will be identified and what other evidence can address your concern in the meantime. Treat an unexplained change of site as a new decision when it affects a critical process.
Account for connected risks
If an overseas supplier will access your systems, data or confidential information, or you plan to work with one, business.gov.au says extra checks can reduce foreign interference risks. Treat that exposure as a separate decision point; product evidence does not address it.
For a consumer product, the ACCC identifies factory audits, tested raw materials, followed assembly processes and quality checks, and current staff training as sourcing considerations. These are useful product-risk indicators but do not by themselves establish the proposed order will meet its requirements.
Supplier due diligence: key statistics and thresholds
- ABN active status
- Confirms current registration but not commercial viability
- Product safety responsibility
- Business supplying goods in Australia is responsible for safety
- GST compliance requirement
- All suppliers must comply with ATO GST rules when selling in Australia
- ACCC oversight
- Enforces consumer protection laws including misleading claims
Check delivery experience and product evidence
Ask for customers whose orders resemble yours in product complexity, quantity and service required. Where practical, contact them through a channel you have checked independently. Ask what they received, what changed and how problems were resolved. A good account of a different product offers limited evidence for your order.
If the goods will be supplied to Australian consumers, examine product safety separately. The business supplying consumer products in Australia is responsible for their safety, including when no mandatory safety requirement applies.
Identify requirements that may apply to the finished product and seek evidence for the version you intend to buy. A tested pre-production sample generally needs further quality assurance. Detailed assessment of standards and test reports belongs in the product compliance review.
Match evidence to the claims you rely on
Product evidence may need to support claims beyond safety. The ACCC gives examples: environmental impacts, emissions or efficiency; ingredients, components, additives or allergens; the country or place of origin of ingredients or components; the extent of genetic or other technological modification involved in production; and health benefits or impacts.
Testing can help establish whether a product falls within a ban and can support claims such as acceptable quality. Possible evidence routes include reliable, independent and preferably accredited laboratories, a certification agency, or written supplier evidence of third-party testing or certification. Where supplier testing or certification is relied on, ask for written evidence, including copies of relevant test reports.
Make a decision from the evidence
| Question | Evidence to review | Gap to resolve |
|---|---|---|
| Who is the seller? | Quotation, identifiers and relevant register result | An unexplained name or status difference. |
| Who performs critical work? | The proposed site, its role and supporting material | An undisclosed or changeable production step. |
| Has comparable work been delivered? | A relevant customer’s direct account | Material differences from your order. |
| What supports a product claim? | Evidence matched to the proposed version | A claim that needs further product-specific review. |
Date the record and assign an owner to each material gap. An unresolved identity, production or safety question may justify holding the order while you investigate or compare another supplier.
If you proceed, record the agreed seller, product version, responsibilities and change process in the order. Revisit relevant checks when the entity, site or product changes. Due diligence improves a decision; it cannot guarantee future performance.
Key supplier due diligence checks for Australian buyers
- Verify the seller's identity using ABN Lookup or ASIC registersConfirm name and ABN match on quotation and registration
- Identify the production site and its role in the supply chainConfirm location, process steps, and whether it may change
- Contact comparable customers for independent feedbackReach out to clients with similar order complexity and volume
- Review product evidence aligned with claims madeCheck test reports, certifications, or third-party lab results
- Assess risks related to foreign suppliers or data accessEvaluate exposure to foreign interference or data security issues
Keep remaining risks visible
Keep the level of checking proportionate to the order and the consequences of getting it wrong. The ACCC notes product testing can help minimise injury risks, avoid supplying banned products and reduce the chances of recalls or compensation claims. Those consequences can inform which evidence gaps need resolution before you proceed.
In this guide
- Verifying company and factory informationMatch a supplier’s invoicing business to Australian registers, then check the proposed factory’s operator, location and role.
- Checking references from comparable customersChoose relevant supplier references, ask about actual orders and problems, and judge how far each account applies to yours.
- Identifying missing evidence in a supplier's claimsTurn supplier claims into checkable questions, identify evidence gaps and decide which points need resolution before ordering.
