Interest in the Supplier Information Management (SIM) market and allied markets such as supply chain risk management, supplier performance management, and vendor master management is running high.  Interestingly, few people seem to realize how many old specialists there are in this market:

Sedex Background

All of these companies are much larger than Sedex, but Sedex is interesting for a variety of reasons:

  1.  UK retailers formed Sedex as a non-profit company owned by its members.  The goal was to audit suppliers once and then allow suppliers to share these audits with multiple buyers.
  2. Sedex was focused, from the start, on the Corporate Social Responsibility (CSR) segment of the SIM market.  These days CSR is more typically called Environmental, Social, and Governance (ESG). The company’s audits cover practices in labor, health and safety, environment, and business ethics.
  3. Sedex has created a widely accepted standard audit format:  the Sedex Members Ethical Trade Audit (SMETA).
  4. Because Sedex is a non-profit based in the UK, the company discloses quite a bit of information about its exchange that will be of interest to any SIM business.

Sedex Financials

Sedex is quite profitable and grew rapidly in 2019.

  • Revenue grew from £10.6 to £17.3 million or 62%.  The company attributed this growth to 10% natural growth in memberships, but also to charging for audits that were previously free.  It seems Sedex made a pretty significant change to its business model in late 2018.
  • EBITDA was £1.2 million after a £2 million non-cash charge for getting out of an onerous contract.  (I wonder what that was?)
  • About 78% of revenue comes from memberships and most of the rest from services.
  • The largest geographic segment for revenue is “Rest of World” at 40%.  The UK is about 30% of revenue, the rest of Europe 20%, and 10% for the US/Canada.

The Sedex Exchange

What’s most interesting about Sedex, however, is the company’s detailed disclosures of the operational metrics Sedex has 70 buyer members who ask their 58,919 suppliers to submit audit results to the exchange.  As you can also see, some suppliers also ask their (Tier 2) suppliers to submit audits (though not many).  One of the most critical metrics, which most networks do not disclose, is how many buyers a typical supplier is connected to.  Sedex tells us that buyers per supplier averages 3.75.  Elsewhere Sedex discloses:

In my experience, this is a pretty good measure of the network effect and Sedex’s stats are pretty strong.

As with many supplier information businesses, the supplier side is quite geographically dispersed, while the buy-side is not.  About 20% of suppliers are in China which is the largest single country.  The UK is the second-largest at under 15% of suppliers, followed by India at less than 10% and the US at about 5%.  On the buy-side, 70% of buyers are located in the UK and no other countries have more than 2 buyers.  So even though revenue comes from all over the world, Sedex is very much a UK company.   It’s just that their UK customers have global supply chains.

Sedex discloses that its 93,000 audited sites fall into the following industries:



This distribution represents the history of the company having been started by the top British grocers and general merchandise providers whose suppliers on farms or in clothing factories faced labor issues.


If you are in the SIM space take note.  You can’t set standards and collect all of the information needed on a supplier across:

  • ESG
  • Financials
  • Cybersecurity
  • EHS
  • Adverse media
  • Risk
  • Quality/Performance

And you can’t do this in every geographic area simultaneously.  Pick your sequence of niches and build a network effect that drives value on the supplier side.  Either that or become an aggregator of information from other sources (a la Bloomberg).  But whatever you don’t get stuck in between!

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