For years, Procurement and Compliance teams have relied on Know Your Business (KYB) checks to vet business partners, collaborators, and in some cases, suppliers. After all, before signing contracts, most large enterprises confirm that a company is legally registered, that its owners are who they say they are, and that its finances are legitimate.
Yet, while KYB has been critical in preventing fraud and protecting enterprises from costly mistakes, in today’s interconnected world, KYB only tells part of the story.
Yes, KYB can confirm that a supplier exists. But KYB can’t tell you how that supplier treats its workers. It can’t uncover whether subcontractors are sourcing unethically. And it can’t guarantee that your supplier aligns with the ESG commitments your board, customers, and investors expect.
That’s where Know Your Supplier (KYS) comes in.
Across Europe and beyond, enterprises are already expanding from KYB into KYS.
With these recent changes, many enterprises are ensuring that they invest in practices that incorporate KYS because the costs of not doing so are staggering. A recent report by Interos found that in the finance sector, supplier-related disruptions cost these enterprises an average of $143 million annually, and that effective KYS programs can reduce those disruptions by up to 60%.
This isn’t just compliance. This is about resilience and consumer trust.
The challenges aren’t theoretical. Even global brands with sophisticated procurement systems have seen their reputations suffer when suppliers fall short.
In 2024, Milan prosecutors discovered illegal labor practices at a factory producing goods for Dior. Workers were found living inside the facility, working extremely long hours, and receiving minimal pay. These abuses were tied to subcontracting arrangements, far removed from Dior’s polished image. Luxury peers like Valentino and Armani faced similar scrutiny in the investigation. On paper, these suppliers were legitimate, with ownership verified and registrations clear.
But the truth was hidden deeper in the supply chain. Regulators and the public didn’t care that the paperwork was in order; they wanted to know how such abuses could occur in the ecosystem of such powerful brands.
The reality is that relying solely on KYB misses the bigger picture. What Dior and its peers needed was KYS visibility into the actual practices of their suppliers, not just the paperwork.
Why US Teams Should Pay Attention to KYS
While Europe has taken the lead on KYS, U.S. enterprises are not immune to the same risks.
For leaders on teams across procurement, compliance, or even supplier diversity, this is about more than “checking a compliance box or diverse small business box.” It’s about protecting your programs, your enterprise, and your credibility.
Procurement has always balanced cost, quality, and speed. But in today’s environment, resilience is equally important. KYS allows you to evaluate suppliers not only on price and performance but also on trustworthiness before contracts are signed.
As diverse suppliers enter your pipeline, supplier diversity and inclusion programs may depend heavily on credibility. Every fraudulent or noncompliant supplier that trickles into the pipeline may undermine its integrity. KYS ensures diverse suppliers are validated, vetted, and verified, giving you confidence to showcase your network.
One final challenge may also lie with compliance and risk teams. These are the teams often responding to the urgent calls when supplier scandals hit the news. KYS helps you avoid those crises by integrating verification into the onboarding process.
France’s Corporate Duty of Vigilance Law illustrates what can happen when a company prioritizes accountability at the heart of its enterprise responsibility. French Procurement teams now must publish and implement vigilance plans covering their entire supply chain.
Initially, many companies viewed this as a burden. But over time, enterprises reported clearer supplier visibility, stronger resilience, and improved trust with regulators and investors. By setting the tone, France became a global leader in supply chain due diligence.
The lesson? What starts as regulation in one country often spreads. For U.S. enterprises, France offers a preview of what’s likely to come next.
OneCredential was built to verify the legitimacy of supplier businesses and certify their small business status. The combination of KYB and KYS can help set these enterprises at ease as we shift into a new era of supplier vetting.
With OneCredential, Procurement verifies registration, Supplier Diversity validates credentials, and Compliance checks ESG data—all through one secure profile. That’s not just efficiency. That’s resilience at scale.
KYB was about confirming existence. KYS is about confirming trust.
In time, adopting best practices with KYS may no longer be optional. It’s the baseline for protecting supply chains, strengthening programs, and defending enterprise reputation.
France’s vigilance law and Dior’s scandal show where the future is heading. Global competitors are already adapting. The question is: will U.S. enterprises lead or be forced to catch up?
With OneCredential, you don’t have to wait. You can make supplier verification smarter, faster, and more secure—starting today.
