Risk Management

Vetting suppliers: avoid introducing risk into your supply chains

Takata.jpgMany Japanese car makers have recalled whole fleets of models owing to faulty airbag modules

Profit is the ultimate objective of every business operation. However, there are several threats to revenue, including market competition, internal fraud, poor leadership, high expenditure, regulatory obligations and weak links in supply chains, particularly concerning suppliers.

“Working with the wrong supplier could cost you money and a customer’s trust,” Rudi Kruger, general manager of Risk Solutions at LexisNexis Data Services, told SmartProcurement. “Simply put, businesses that receive goods or services from untrustworthy sources run a great risk of failing to meet their own obligations to customers.”

Protect the procurement process from conflict of interest

RudiKruger_2017.jpgProcurement practitioners are responsible for ensuring a fair and transparent procurement process that is free from any conflicts of interest. Despite frameworks like the Public Finance Management Act, Municipal Finance Management Act and the King IV Report on Corporate Governance, there have been numerous incidents in which procurement professionals were found guilty of allowing their personal lives to interfere with their professional responsibilities and duties.

Rudi Kruger, General Manager of LexisNexis Risk Management, points out typical types of conflict of interest that procurement professionals could potentially benefit from, in SmartProcurement.

Procurement benefits most from supply chain digitisation

RudiKruger.jpg
The age of 1s and 0s has revolutionised the way we consume and share information. In the commercial environment, there is hardly a business function that does not make use of technology to perform even the simplest of tasks. Supply chain has been one of the departments to embrace technology the slowest. However, the SC Digest Supply Chain Digitization Benchmark Survey 2016 revealed a shift in mind-set, with about 80 per cent of respondents identifying digitisation as a key focus area.

Rudi Kruger, general manager at LexisNexis Risk Solutions discusses the key advantages of the IT shift for supply chain, which include enhanced safety, reliability, reduced carbon footprint and cost saving.

Identifying and mitigating global sourcing risks

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Before you start, ensure that you have the best global sourcing and product experts that you can afford, says Sanet Shepperson (MCIPS) in this month’s SmartProcurement.

Procurement fraud - why does it continue to thrive?

 

procurement-fraud-scandals.jpg“Procurement fraud happens within the entire value chain of organisations. Because decisions are made on every level, some procurement officials get a chance to manipulate the system, and accept bribes,” says Lebogang Letsoalo, Director at Sincpoint Pty Ltd.

 

Case study: Supply chain risk assessment

 

Nico_Snyman.jpgIn this month’s SmartProcurement, Crest Advisory Africa’s Nico Snyman outlines a case-study on supply chain risk assessment.

Failing to identify supply chain risk is a business risk in itself

 

DavidNoble.jpgA procurement and supply function that does not have a good understanding of how to identify, mitigate and avoid supply chain risk is itself a significant risk for an organisation.

This is just one of six internal risk influencers highlighted in a CIPS good practice guide for developing end-to-end supply chain resilience in organisations.

“With the risk landscape getting bleaker, supply chain professionals should be talking more about resilience, any negative impact on how consumers perceive a business can rattle around for years,” said David Noble, CEO of CIPS.

Overpricing is where government's real leakage sits, says Treasury's Kenneth Brown


Kenneth_Brown.jpgIt is South Africa’s equivalent to the proverbial $640 Pentagon toilet seat — a paper binding machine that the government buys from its suppliers for the rand equivalent of almost $2,000, about 13 times what it should cost.

Chief Procurement Officer Kenneth Brown cited the binding machine as an example of the massive waste that means as much as 40% of the government’s R600-billion budget for goods and services is being consumed by inflated prices from suppliers, and by fraud.

Addressing this would mean that "without adding a cent, the government can increase its output by 30%-40%," he says. "We could be building more roads, more schools without even adding more money to the current budget."

SA 42nd for global supply chain resilience

 

SA-flag.pngMeasured according to different dimensions of supply chain risk, South Africa was ranked 42nd out of 130 measured countries and territories in 2016.

Insurer FM Global's Resilience Index ranks countries most and least exposed to different dimensions of supply chain risk, having measured their resilience to supply chain disruptions.

The survey data examines nine key drivers of supply chain risk and groups into three categories: supply chain, risk quality and economic factors.

The trade-off between clean audits and innovative government

 

HelenZille.jpgIt took Western Cape Premier Helen Zille years in government to learn that South Africa is the only country in the world that has developed the concept of a ‘clean audit’. And there is a good reason why other countries have not; trying to achieve a clean audit can actually become a stumbling block to service delivery. It also puts a brake on innovation in government, said Zille in a recent article for the online newsletter of the Premier of the Western Cape.


The Auditor-General’s announcement of provincial audit outcomes is a topical news item. The Holy Grail is a ‘clean audit’. This year the Western Cape achieved 12 clean audits out of 13 departments. But what does this actually mean?


When asked what action would be taken against the Minister and Head of the only Western Cape department that did not get a clean audit, Zille’s answer was “none”; because failing to achieve a clean audit does not imply financial mismanagement or corruption.

How collaboration reduces global supplier risks

 

CollaborateRiskManage.jpgOwed to increasing globalisation, organisations are doing business with partners outside of their traditional comfort zones, complicating supply chains with an array of risks and variables that must be managed to avoid disruptions like quality issues, shipment delays or product shortages.


Deciding on the best approach to reduce global supply chain risks has long been analysed by supply chain management professionals.


Collaboration as a method of risk management is one of them: it involves improving visibility and sharing risk-related information across the entire supply chain. This method allows for risks to be spread out across a trading partner network as a practical way of distributing the ability to control risks in the respective areas of each link in the supply chain.

Supply chains, your customers are watching!

 

InformedCustomers.jpgWhat would be the point of business if it were not for customers? With the growth of technology and the rapid exchange of information, consumers are taking advantage of their role in commerce. They are becoming more informed, astute and prudent with their purchasing power now more than ever before. Their particular influence on supply chain was highlighted in the KPMG 2014 Top of Mind survey, which claimed that “customers are demanding end-to-end information. They want to know who produced their products, where they came from and what they are made of”.


The survey included feedback from 469 South African consumer executives, many of whom indicated that corporate strategic priorities were directed towards supply chain and related technology between 2014 and 2015.

Procurement a major catalyst of Job creation

 

LindiweZulu.jpgSmall Business Development Minister Lindiwe Zulu is confident that procurement will be a major a catalyst for job creation in South Africa.


Addressing delegates at the Smart Procurement World Conference in the Western Cape last week, the minister acknowledged that small and medium enterprises (SMEs) face daily challenges and repeated the call to big business to assist SMEs and entrepreneurs to find finance, skills development and mentorship.

4 risk management strategies to ensure supply chain continuity

 

JimMakuwa.jpgA prudent supply chain professional knows that each transaction is worth its value or the negative impact of it going wrong and has to be treated as such.


High-value transactions need scrutiny commensurate with the risk that the organisation may be exposed to if something goes wrong. In other instances the transaction value may be intrinsic, but the effect may be devastating and it is for these reasons that one has a backup plan.


“It boils down to being inquisitive. Considering that risk is prevalent in supply chains, ‘What if’ can help prevent a fatal judgement error,” says Jim Makuwa, a tutor for Commerce Edge Academy, in this month's SmartProcurement.

You're only as good as the quality of your suppliers - but do you measure their quality?

 

SupplierQuality2.jpg'Failure of a supplier to deliver goods on time and of high quality' ranked third in an AMR Research study of the top supply chain risks for businesses in a global environment.Ranked fourth was 'product quality failure'.With all the concerns facing global supply chains, one of the largest is product quality. Ensuring quality down the supply chain can have a critical effect on many businesses in the global economy. What stands between you and knowing your supplier quality?

19 checks to evaluate supply risk

 

Supply_Risk.jpgSupply risk comes in many forms. You can mitigate one type of supply risk but be victimised by another. The following supply risk checklist, from Next Level Purchasing, can help you identify and prevent common risks of taking on board a critical new supplier.

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