The Basics of COI Tracking for Manufacturing

Manufacturers rely on third-party vendors and suppliers to keep their production on track and on budget. However, whenever you rely on external businesses for support, you’re also exposing yourself to risk. A comprehensive risk management program can help protect your business, and certificate of insurance (COI) tracking for manufacturing should be one of its main cornerstones. Maintaining careful documentation of COIs not only helps ensure your vendors remain contractually compliant, but it also simplifies the claims process should an incident occur. 

We’ll explain what you should understand about third-party risk in manufacturing to better protect your business. 

Third-Party Vendors That May Increase Risk Exposure in Manufacturing

• Machine & Equipment Providers
• Machine & Equipment Repair Teams
• Cleaning Services
• Raw Material Producers
• Logistics Providers
• Distributors
• Financial Institutions
• Waste Disposal Services
• Much More!

Sources of Third-Party Risk in Manufacturing

Cybersecurity

The increasing prevalence of industrial internet of things (IIoT) devices and smart factory technology exponentially heightens the cybersecurity risks to factories. Formerly, many manufacturers faced minimal threat since most of their equipment was kept offline. However, devices are increasingly interconnected to monitor performance, determine maintenance needs, and implement safety controls—thereby increasing exposure to cyber threats. 

If an outside vendor has been hacked and has access to your systems, the threat actors could navigate into your network and endpoints to interrupt production, steal secrets, and wreak havoc. 

Operational 

For a manufacturer to maintain its profitability, it needs to be able to continue normal operations uninterrupted, but an incident with a supplier or vendor could derail this. Based on a Deloitte survey, 56% of chief procurement officers say a supplier went out of business or was hampered in the last 12 months, and 41% expedited shipping due to supply chain issues. Any delays, closures, or failures by the third parties you work with could hold up and hurt your bottom line. 

Health & Safety

Everyone makes mistakes, but slip-ups can be costly for manufacturers. If a third party’s errors result in an injury to a customer or employee, your company may be liable for damages, healthcare costs, and/or lost income. Effective contractual risk transfer coupled with careful COI tracking can help shield your company. 

Regulatory

Not only do you need to comply with industry regulations, but vendors, suppliers, and subcontractors may also be required to comply. If not, you may be held accountable. What’s more, working with parties on one of the many sanctions, regulatory, or law enforcement lists can result in hefty fines, so not only should you track COIs, but also screen any vendor you consider working with. 

Reputation

Your company’s reputation can be affected by the actions of a vendor or supplier. While the losses are unquantifiable, 11% of chief procurement officers reported experiencing brand damage due to issues with suppliers. Your contracts and COI tracking efforts can be effective tools to limit risks to your reputation and recover damages if an incident occurs. 

bcs: Your Partner in COI Tracking for Manufacturing

As a preeminent COI tracking solution provider with extensive experience in the manufacturing sector, bcs will support your team with the tools necessary to maintain documentation and mitigate risk. Our self-service and full-service solutions both provide full access to the bcs app with our proprietary COI tracking software—enabling you to collect, review, and maintain documents, streamline processes, and automate components to simplify your insurance tracking efforts. An expert team of compliance analysts also supports our full-service clients to help them achieve the highest standard of risk management through careful review and correction of COIs.