Protiviti: Taking Supply Risk Management to the Next Level

Earlier in the summer, I sat down with Phillip O'Keeffe, a practice leader for Protiviti's supply chain risk management group. To be completely honest, it was one of the most educational 60 minutes I've spent with a vendor or service provider all year. What differentiates Protiviti from other consultancies with a supply risk management practice is their breadth, methodology, focus and experience related to supply risk. When I first approached Protiviti, I thought that their approach would be to apply a general risk framework staffed with twenty-something "green beans" -- the old Andersen consulting model, from which the firm spun-out. In reality, I found that their model is very different. Perhaps owing to the fact that Protiviti was formed by the partners of Andersen's internal audit and risk consulting practice -- not the business consulting practice -- their staffing model places much greater emphasis on skills and experience based rather than a more junior, leveraged approach. Indeed, if you tossed a 30-something MBA from a Big 5 consulting firm at a typical supply risk engagement, they'd probably be lost.

So what makes Protiviti different? I'd argue their core strength when it comes to looking at supply risk management is their ability to consider risk beyond the areas of supplier financial and market stability. Thanks to Open Ratings' marketing push, this specific area has pretty much defined the supply risk management sector up until now. But to Protiviti, supply risk is much larger. It begins with the design of a product and its value chain and goes all the way through to demand planning, production, warehousing, distribution, etc. Even if looked at from just a sourcing standpoint, risk is inherent in a great range of activities, from up-front strategy development, risk management process capability, through to the contract award decision and post-award contract and supplier management. Does it introduce less -- or more -- risk for example to move from a domestic sole-source strategy to a global sourcing strategy with multiple suppliers? Or consider the supply risk impact of introducing a lean production environment.

Typically, Proviti does not begin engagements with a bias towards examining risk in any specific areas of the procurement process, or with a specific solution only in mind. Rather, they prefer to look at how risk cuts across elements, and at the interdependencies of related sets of activities. For example, they might consider the types of risk a company opens itself up to by sharing less information with suppliers, rather than more. By holding information close to the chest, does a company in fact open itself to greater risk down the road? What does it give up in the way of joint collaboration and cost-take out activity? And what's the risk of involving only a sub-set of internal individuals in the selection and evaluation process rather than a cross-functional cadre of stakeholders? It's questions like this, and many more, which go beyond simply maintaining the continuity and quality of supply which Protiviti likes to tackle.

Once Protiviti and their clients have identified, assessed and prioritized risk areas and their impact on the overall procurement and operational environment, a consensus is reached with management on "risk appetite" and the desired investment to mitigate risk and take advantage of opportunities. This leads to the creation and implementation of integrated action plans to correct and mitigate these risks in a prioritized fashion comes next. And part of this efffort requires extensive communication and discussion between different elements of an organization. It's not just a question of slamming in the right processes and procedures, or technology system or retraining a specific team inside the function. Protiviti most often stays involved in these conversations and plays a key part in the implementation of the risk management approach including strategy, process, organizational, information, tools and systems and data recommendations (though the firm is not a systems integrator when it comes to technology, software is only a small component of the overall solution to tackling the supply risk issue, anyway).

Jason Busch

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