4 tips to manage supplier risk


RudiKruger_2017.jpgSuppliers can fail you in many ways. Supplying inferior quality goods and services, missing deadlines or data breaches can affect the bottom line and reputation of a business.

However, while risks are ever-present, some are more avoidable than others - including the effects of mistakes and failures by suppliers" says Rudi Kruger, General Manager of LexisNexis Data Services.

This is why procurement functions are measured not only against their efficiency and success in sourcing reliable commodities and services at a reduced cost, but also against their ability to ensure that the business is exposed to minimal risk during the procurement process.

"Quality disasters can result in additional costs to the buying firm, while failing to deliver on time will affect your ability to deliver to your customer. Suppliers may also enter into fraudulent relationships with employees, which create opportunities for conflicts of interest."

When suppliers are not able to perform at their best, buyers need to be aware and ensure that they are always in a position to safeguard the operation when the need arises. This can be achieved through effective risk management. Kruger offers the following tips:

1. Research the supplier to identify risks - it is important to gain critical insight into suppliers by researching their performance and capabilities. Gain information on where suppliers source from and the challenges they face within their own supply chains. Suppliers must be transparent and willing to declare crucial information that could potentially affect your business. However, information can also be obtained by having access to the supplier's company records via online solutions, such as Lexis ® Diligence.

2. Know who you can trust - once the most trustworthy suppliers are identified, build a preferred internal supplier database. This will ensure procurement will not only have access to the right combination of suppliers, they will also have a pool of reliable suppliers to turn to when others fail. A preferred suppliers list allows businesses to attain the best overall value. Having knowledge of cost estimates, delivery capabilities and financial stability means that you can invest more trust in your preferred suppliers. A solution like Lexis ® ProcureCheck allows you to create your own internal vendor list with preferred and restricted vendor indicators that can be managed easily.

3. Continually vet suppliers - even previously reliable suppliers can fail. Therefore, it is important to always remain vigilant and protect your organisation and its assets by monitoring and uncovering negative news on suppliers on an ongoing basis.

4. Leverage technology - technology and digital solutions, such as Lexis ProcureCheck, serve to make the procurement process simpler, smarter and safer, saving time and money. The solution assists the procurement, compliance, forensic and internal audit departments in their procurement vetting processes and vendor management, by offering an online automated workflow tool that will assist in mitigating risk. Used in conjunction with Lexis Diligence, the powerful solution enables users to manage reputational risk and to investigate negative and positive news on suppliers. Lexis Diligence goes further by protecting your organisation from fraud, extremism and activism, counterfeiting, political risk and other criminal activities with its many due diligence capabilities.

For more information, visit Lexis Procurecheck and Lexis Diligence.

Leave a comment

SmartProcurement Newsletter

Please enter your details below to receive the SmartProcurement Newsletter for FREE on a regular basis.

As part of the SmartProcurement Newsletter you will be receiving World Class Procurement News, Tools, Tips, Tactics, Procurement Training updates, Upcoming Events, and the latest Procurement Career Openings.

* Email Address:
* Title:
* First Name:
* Surname:
* Company:
* Country:
* Public / Private:



Career opportunites

Warehouse Manager

  • <500 000 Gauteng Logistics & Warehousing Operations, Planning & Inventory Permanent
R400 000 - R480 000 CTC per annum.Location: ...More

Supply Chain Analyst

  • <500 000 Analyst Permanent Supply Chain Western Cape
R400 000 - R500 000 per annum.Location: Cape ...More

Commodity Manager

  • <500 000 Commodities Gauteng Permanent Procurement Consultant
R650 000 - R750 000 per annumLocation: Cape ...More

Logistics Manager

  • <500 000 Gauteng Logistics & Warehousing Operations, Planning & Inventory Permanent
Salary: R 800 000 - R 900 000 ...More

Demand Planner

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Projects / Category Management
Salary: R 600 000 - R 650 000 ...More

Supply Chain Analyst

  • <500 000 Analyst Gauteng Permanent Supply Chain
R600 000 - R700 000 per annum Location: ...More

Commodity Manager

  • <500 000 Commodities Gauteng Permanent Procurement Management
R850 000 - R1 000 000 per annumLocation: ...More

Commodity Manager

  • <500 000 Commodities Permanent Procurement Management Western Cape
R700 000 - R850 000 per annum,Location: Western ...More

National Supply Chain Manager

  • <500 000 Across borders Permanent Procurement Management Supply Chain
R750 000 - R1 000 000 per annum,Location: ...More

Industrial Engineer

  • <500 000 >500 000 Industrial Engineer Operations, Planning & Inventory Permanent Western Cape
R450 000- R500 000 CTC per annum,Location: Western ...More

Commodity Manager

  • <500 000 Commodities Gauteng Permanent Procurement Management
Category: Procurement,Salary: R700 000 - R800 000 per ...More

Supply Chain Manager

  • <500 000 Gauteng Permanent Procurement Management Supply Chain
Category: Consulting,Salary: R750 000 - R800 000 CTC ...More

Logistics Manager

  • <500 000 Across borders Logistics & Warehousing Permanent Procurement Management
Category: Logistics,Salary: R900 000 - R1 000 000 ...More

Demand Planner

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Projects / Category Management
Area of Specialisation: Planning,Salary: R500 000 - R650 ...More

Industrial Engineer

  • <500 000 Analyst Gauteng Industrial Engineer Permanent
R800 000 - R850 000 CTC per annum.Location: ...More

Security Manager

  • <500 000 Analyst Gauteng Permanent Procurement Officer / Specialist
(Total Cost to Company R350K - R550K).This is ...More

Operations Manager

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Projects / Category Management
(Total Cost to Company R650k - R750k) excluding

Commodity Manager Raw Materials

  • <500 000 Commodities Gauteng Permanent Strategic Sourcing
(Total Cost to Company R980k - R800k) excluding ...More

Commodity Manager Logistics

  • <500 000 Commodities Gauteng Logistics & Warehousing Permanent
(Total Cost to Company R1mil - R900k).Industry: Engineering

Procurement Consultant

  • <500 000 Gauteng Permanent Procurement Consultant Procurement Management
(Total Cost To Company 550K - 450K) includes ...More