We are in an increasingly complex global environment with the ongoing Brexit negotiations and impending exit in 2019 as well as tariffs being imposed globally and subsequent trade wars and political volatility.
Businesses are in a challenging position regarding managing their supply base and supply chain risks; from availability of workforce with changes to freedom of movement, to the more obvious import and export cost considerations and potential currency fluctuations as a result of such momentous changes to our position within Europe and Globally.
It is essential Procurement lead the implementation of effective risk management strategies to mitigate and manage some of these risks, but also ensure they are prepared and able to capitalize on opportunities as a result of change.
Risk Profiling should be standard practice in evaluating suitable suppliers for any third-party selection processes and as part of the full procurement cycle.
Typically, a process is followed from Risk Identification, Risk Assessment, Risk Management and Risk Monitoring; understanding the likelihood and impact of risks such as supplier financial stability, reliability of supply with low stock holding, and lean practices.
Thinking needs to be bigger, Procurement need to lead preparations and contingency planning to enable swift response to changes in terms of:
- Price: In evaluation of price volatility on an ongoing basis with effective triggers for action, being aware of these risks is key to supporting in the delivery of business strategy
- Markets: Understanding and monitoring the Market including competitor capability, alternatives to supply and geographical considerations
- Demand: peaks and troughs in demand and ability to respond to short notice demand changes
There are all impacted by logistical issues, union strikes and mergers and acquisitions changing market dynamics, to name a few. Being informed and prepared puts you in an advantageous position to manage continuity of supply.
It is essential to really know your suppliers, their competitors and the markets, be fully up to speed on supplier contractual terms and have robust Category Strategies.
It is difficult in the new age of information overload to ensure we have accurate information and are responding to real facts and informed dialogue. A social media post can go viral and half a business share price or equally increase the demand for a service or product tenfold. Access and impact is instant and therefore reputational risk is a key factor for consideration in both risk profiling and your ability to stay accurately informed as part of ongoing management processes.
At JDP we work closely with our clients to ensure Risk Management and Profiling is embedded in Strategy Development, implementation and ongoing Supplier and Contract Management.
We utilise a range of tools to score impact and probability, manage and mitigate risks and embed management processes, giving you the advantage of being the first to respond!
To find out more contact us via email@example.com for an informal chat or to setup an initial scoping meeting to understand how we can support your business.