More on the Brian Farrington PROCURISK™ product

- November 29, 2012 10:30 AM
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We recently featured an excellent article on supply chain risk by Carlos Alvarenga, who leads the Operations Finance and Risk practice at Accenture. Do read it if you haven’t already. And on the risk topic, we also mentioned in that piece the tool launched by Brian Farrington Ltd (BFL) – PROCURISK – that we first covered here. Since then, we’ve looked at it in a little more detail.

PROCURISK™ has twelve “carefully designed and structured areas of Procurement & Supply Chain risk, including financial risks”. These are:

  • Contract Risks
  • Financial Risks
  • Supply Market Risks
  • Supplier Relationship Management Risks
  • IT Systems Support Risks
  • Procurement Dependency Risks
  • Intellectual Property Risks
  • Pricing Decision Risks
  • Vendor Risks
  • Procurement Performance Visibility Risks
  • Intellectual Capital Risks
  • Contract Management Risks

Users have three options in terms of how they use it (and, I imagine, the related cost). In order of increasing complexity.

1.  Complete the Metrics online and receive a risk positioning status online back from BFL

2.  Services of an accredited BFL consultant to sample the Metric responses to confirm that judgments are founded on sound logic (so a certain amount of checking that the self assessment is reasonable)

3.  Accredited consultant visits client site to lead the risk evaluation and be fully supported by specialists (a full external verification of the risk analysis)

Let’s look at one component of the assessment to give you an idea of how it works.

So one Metric is – “Contractor performance KPIs set out in the contract”

The Statement is – “Our contracts include the performance criteria against which the supplier’s performance will be measured”

Then a Marking Scale is given with indicative statements for the user (or the independent consultant) to score the current performance. So, for example,  “Other than a delivery date our contracts do not set out performance criteria”, would score 0, and other statements will indicate a higher score.

At the end, a “spider chart” is produced using the 12 areas under consideration (listed above)

Of course, we’ve seen self-assessment performance tools before, but they tend to be fairly broad. With its focus purely on risk, which is such a hot topic at the moment, this is an interesting addition to the list of available tools for procurement functions.

Comments

  • stephen ashcroft:

    There are powerful business reasons for Procurement to seek to provide an input to their organisations corporate risk management agenda, including:
    1) Reputational risk derived from inadequate management of procurement and supply chain risk
    2) Financial performance from the certainty that inadequate management of procurement and supply chain costs negatively impacts on the bottom line
    3) Flaws in procurement and supply chain strategies compound inefficiencies in other processes leading to unacceptable produce/service provision to internal/external customers
    4) Exposing those risks that require immediate action and highlight where business improvements can be made.
    5) Ensuring actionable data for the in-house Procurement team is a relatively minor cost compared with the consultancy sums that are required by the consultancy ‘big league’ to arrive at their analysis

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