5 Procurement risks that need to be made visible

| 0 Comments
Risk Grid.jpgEconomic uncertainty and slow growth in many sectors of the South African economy has focused senior management’s attention on improving efficiencies in their businesses. Measuring risk is integral to managing how efficiently organisations expend their money: ‘risk’ covers the management of internal processes around expenditure and the behaviour of management and staff, Alan Low of Purchasing Index (PI) tells SmartProcurement.

With growth in Europe at all-time lows and signs that demand for imports in China and India is slowing, the value of South African exports is likely to fall. Similarly, domestic demand is still weak and, therefore, businesses are turning their attention to the management of their expenditure to improve profits; including management of the risk of "inefficient expenditure."

At one end of the scale this means managing innocent behaviour resulting in inefficient expenditure and at the other it includes proactively detecting areas of fraud and corruption.

Local legislation (The Prevention & Combating of Corrupt Activities Act – 2004) makes the failure to report corruption exceeding R100 000 in value a criminal act; and while admitting that your company has been defrauded is never good publicity, coming to an arrangement with anyone who has defrauded your company could result in senior managers being criminally charged!

The recently enacted UK legislation (UK Bribery Act – 2011) has jurisdiction outside that country’s borders and provides for prosecutions to be brought before UK courts where non-UK companies that do business in the UK (i.e. supplying UK customers, etc.) fail to prevent bribery. A company can invoke in its defence that it ‘had in place adequate procedures designed to prevent persons associated (with the company) from undertaking such conduct’.

Whilst many organisations have such procedures in place and investigate corruption when it is uncovered, most have few or no systems that can detect areas where it has occurred or is likely to occur.

Therefore, for legislative and commercial reasons PI is working with its clients to build relevant, proactive analysis services to manage and measure risk and to uncover areas where spend may be fraudulent. These include the mundane to the exotic, but here a 5 areas that need attention:

  • Uncovering staff who are also suppliers to an organization.
  • Reviewing undisclosed family interests in suppliers.
  • Monitoring non-contract and unapproved spend.
  • Highlighting processes that may allow staff to make unauthorised spend.
  • Reviewing delegated spending limits and spend patterns.

Furthermore, using probability analysis and other algorithms can highlight areas for further investigation.

PI’s experience is that monitoring systems often change organisational behaviour. Our aim is to assist organisations to improve corporate governance and help them prevent inefficient expenditure of company funds before it happens.

For more information contact Alan Low at Alan@pibenchmark.co.za

Leave a comment


SmartProcurement Newsletter
X

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:
  Position:
* Country:
* Public / Private:

 

 

Career opportunites

Demand Planner

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Procurement Consultant
Salary: R500 000 - R500 000 per annum.Location: ...More

Fuel Logistics Manager

  • <500 000 Logistics & Warehousing Operations, Planning & Inventory Permanent Western Cape
Salary: R600 000 - R720 000 per annumLocation: ...More

Supply Chain Manager

  • <500 000 Gauteng Permanent Projects / Category Management Supply Chain
R650 000 - R700 000 per annum.Location: Johannesburg.A ...More

SENIOR BUYER

  • <500 000 Buyer Gauteng Permanent Supply Chain
R500 000 - R550 000 per annum,Location: Midrand,A ...More

Supply Chain Analyst

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

Supply Chain Manager

  • <500 000 Gauteng Permanent Supplier / Business Development Supply Chain
Salary: R600 000 - R700 000 per annum,Location: ...More

Demand Planner

  • <500 000 Gauteng Logistics & Warehousing Permanent Projects / Category Management
Salary: R450 000 - R550 000 per annum,Location: ...More

Demand Planner

  • <500 000 Gauteng Logistics & Warehousing Operations, Planning & Inventory Permanent
Salary: R500 000 - R500 000 per annum,Location: ...More

Warehouse and Distribution Manager

  • <500 000 Logistics & Warehousing Permanent Procurement Management
Salary: R650 000.00 - R850 000.00 CTC pa,Location: ...More

National Supply Chain Manager

  • <500 000 Gauteng Permanent Procurement Management Supply Chain
Salary: R900 000 - R1 000 000 per ...More

Procurement Specialist

  • <500 000 Gauteng Permanent Procurement Management Procurement Officer / Specialist
Salary: R380 000 - R420 000 per annum,Location: ...More

Supply Chain Analyst Lead

  • <500 000 Analyst Gauteng Permanent Supply Chain
Salary: R1 000 000 - R1 100 000 ...More

CIPS Tutor and Coordinator

  • Gauteng Permanent Projects / Category Management Supply Chain
Commerce Edge South Africa,Division: Commerce Edge Academy,Location: Johannesburg, ...More

Warehouse Manager

  • <500 000 Gauteng Industrial Engineer Logistics & Warehousing Permanent
Salary: R480 000 - R600 000 per annum.Location: ...More

Senior Buyer

  • <500 000 Buyer Gauteng Permanent Procurement Consultant
Salary: R600 000 - R650 000 per annum.Location: ...More

Operations Manager

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Supply Chain
Salary: R700 000 - R800 000 CTC per ...More

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