Supply Risk: Keep Doing What You're Doing And Take Advantage of the Crisis

Rahm Emmanuel, Obama's chief of staff, once remarked: "You don't ever want a crisis to go to waste..." This statement holds true for procurement as well.

A couple weeks back, I spoke on a panel to the ISM Silicon Valley chapter about Supply Risk. One of the more interesting points that came out of the conversations was that, in a majority of the company's represented, procurement people are being tasked (on top of everything else) with addressing supplier risk. Not finance, not operations; mostly procurement. Executives assume that asking Sourcing and Procurement folks about which suppliers are risky will yield cogent responses; after all, those are the folks who deal with suppliers daily, right?

The sourcing manager sees a drop-off in participation from a particular supplier or industry. Buyers notice increased activity in catalog item pricing and availability or, worse still, they see missed deliveries or declining quality. And AP or treasury sees an uptick in early-payment discount offers on published remittance schedules.

As logical as an executive's assumption is that supplier-facing folks would know which suppliers are at risk, I would love to hear a spend management professional push those executives to follow through on that logic. Why stop at the anecdotal knowledge and sparse coverage of spend management professionals when automation of their processes and e-enablement of their suppliers can yield the same detail across thousands of suppliers?

I would advise leveraging the current attention given Supplier Risk to lobby again for the basic tools to get best practices spend management done. One of the best practices is, after all, supplier inclusion/enablement/collaboration/partnership (pick your favorite touchy-feely term here). A natural offshoot of good spend management, then, is much better KRIs (Key Risk Indicators) obtained by really knowing your suppliers. Turns out improving the fundamentals of spend management is still key to really acting on the newer, trendier issues coming down from the executive suite.

So there you have it. Use the hot button interest around supply risk management at the moment to push through your own agenda and needs, grabbing budget and attention for a broader set of issues that transcend -- but encompass -- supply risk. But act fast. The window might be closing, as it does with all trends.

Paul Noel

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