Managing and minimizing supplier risk, even when times are hard
In today’s complex world, supplier risk management is just as critical to your organization’s financial health and competitive performance as your efforts to produce cost savings. Supplier risk management must be built into your organization’s ongoing supplier interaction
in order to be effective.
Working in Finance or Procurement, you undoubtedly spend much of your time looking for ways to reduce operational costs, produce cost savings, and generally “do more with less.”
But the other big part of your responsibility is to manage risk. The negative impact of an event, such as the current situation, on your organization’s financial position is huge, potentially even devastating. Risk simply cannot be ignored.
When it comes to the supply side of your operations, risk management clearly involves managing the risk of serious problems that could be caused directly by the actions or inactions of your suppliers.
The only way to minimize supplier risk
is to maintain a high level of visibility of the information that acts as key indicators of each supplier’s ability to perform, such as:
- Business continuity plans.
- Quality and safety assurance processes.
- Certifications and regulatory compliances.
- Insurance and disaster recovery plans.
- Actual performance history and internal satisfaction levels.
- The list goes on…
In many organizations, the challenge to maintaining the necessary level of visibility comes from the way in which supplier information is collected, stored, and managed:
- A reliance on paper information and documents that cannot be easily analysed.
- Multiple, dispersed systems containing different types of supplier information; sometimes conflicting where they overlap.
- Manual and disconnected processes that don’t use or contribute to a single view of suppliers.
- Information that may have been accurate at one time, but is now out of date.
True visibility of supplier risk can only be maintained through consistent, consolidated, and on-going management of supplier information throughout the supplier relationship lifecycle. The situation surrounding and within a given supplier is constantly changing in both expected and unexpected ways.
The fact is it requires a variety of integrated tools and processes
in order to maintain the necessary level of supplier visibility needed to effectively identify and manage risk.
Download the white paper: Supplier Risk Management: Do you really have the right level of visibility to minimize risk?