Technology has become a part of procurement and is an integral part of the supply chain management in many organisations today. Many CPOs now use technology for risk management as it can help with data capturing, ensure secure data management, and offer advanced tools to analyse data while minimising retrieval time.
Procurement can integrate enterprise risk management technology with the company’s enterprise resource planning system to mitigate risks. That, in turn, will allow them to find solutions before problems occur, helping them to make informed decisions.
Technology for multi-tier risk management
Few companies focus on the end-to-end supply chain, so are not equipped to assess and manage risks across the supply chain. Most organisations focus on tier one risks, so when issues occur in any other tier, procurement is unable to handle them.
However, with the right technology, risk managers, as well as category managers, can get a clear picture of the supply chain. Some ways that procurement can use technology across the value chain are as follows:
Data analysis: Procurement no longer has to analyse data manually. Technology can handle vast volumes of data and analyse it to identify potential risks and bottlenecks in the supply chain. It enables procurement professionals to take proactive steps to keep the supply chain running smoothly.
Automation of inventory: The right technology can ensure organisations do not have to contend with depleting inventory levels. When procurement opts for automation, they will have a clear picture of the raw materials on hand, and the supplier’s inventory level. If there is a shortage, the sourcing team will be informed.
Finding alternate suppliers: Based on market intelligence, technology can assist procurement to identify alternative suppliers and vendors who can handle the volumes and specifications required by the company. The system performs the due diligence on suppliers while also analysing price risk when dealing with an out-of-contract supplier.
Procurement must deal with market risks present in the demand and supply side. By incorporating the right technology, it can make risk management easier and less cumbersome. Collective risk management has become the norm, so it is essential to bring all stakeholders on the same platform. When companies have the right technology to manage risks, they can stay ahead of the competition.