Risk management strategies to make your supply chain efficient

As a procurement professional, you may already be aware of the integral risks to any…...

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As a procurement professional, you may already be aware of the integral risks to any supply chain. programmes are fast becoming popular, as organisations look to address the expected and unexpected events at every level of their supply chains.

While companies still treat risk management as a compliance issue, they should realise that when risk is organised properly, it will not harm your profitability and operations. However, your ERM system will not be able to eliminate every risk in your supply chain. Instead, you should focus on creating a high-performing supply chain that is completely secure.

Here are a few things that you can do to avert risks in the procurement supply chain:

Make contract management innovative and efficient

Do away with cumbersome and onerous contracts. Instead, opt for a contract template that is clear and direct with simple language that your procurement teams can understand and implement. Well-drafted, concise and properly balanced contracts will help them to execute deals quickly and with minimal confusion. This will tighten your contracting cycle and help to make procurement more efficient.

Ensure your supplier has insurance

You should always evaluate your liability potential when using a supplier for products or services, by ensuring that your supplier has insurance for example. This will protect your business interests and provide a protective buffer to your procurement organisation against claims that are a result of your supplier’s actions and non-compliance. Ensuring that every contracted supplier has the right insurance to aid in your risk management endeavours is crucial to improving efficiency and is something you should evaluate today.

Avoid a single source supplier

You may feel that having one reliable supplier to source products and services is your best option as this will help you to build a good working rapport. However, this is a false presumption. The moment a disaster occurs and the supplier is unable to meet your demands, your entire supply chain could fall apart overnight. Therefore, you should always have a balanced portfolio of suppliers so that you can undertake strategic sourcing and also maintain a sustainable supply chain.

Using these techniques, you can effectively manage risks in your procurement supply chain to improve efficiency. By securing and strengthening your procurement processes, you can navigate these difficult situations and future-proof your organisation.

Ed Cross

Ed founded Odesma in 2014 with the explicit intent of creating a new kind of procurement consultancy founded entirely on cloud principles. Deploying best-of-breed subject matter experts alongside the best on demand technology to deliver rapid and effective change for customers.

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