Risk Management

Vendor database optimisation: Are you doing it right?

Schalk_vdMerwe_100.jpgOne of the primary components of any procurement function's strategy is, or should be, to ensure that the company has an optimised vendor base. This is aimed at achieving a more cost effective and high-quality supply chain.

Most companies therefore go through a vendor rationalisation process at some stage and continually review vendor categories to ensure that the selected set of vendors remains the best fit for the respective services or products they deliver to the business.

Optimising the vendor base is normally done by assessing various elements such as pricing, service delivery, contractual terms, internal stakeholder sentiment etc., which are, of course, all very important elements to consider. However, the important elements most often overlooked are the non-contextual ones, says Schalk van der Merwe, Executive Head: Supply Chain Governance at data powered risk solutions provider Inoxico.

High-performance procurement risk management

PerSegerberg_100.jpgWhat 'procurement masters' are doing and how they are benefitting

An Accenture study involving more than 125 chief procurement officers observed a profile of how high performers in risk management operate.

The study identified "procurement masters" in organisations that save at least ten times as much as it costs them to operate their procurement organisations. Organisations operating at a lower level save about four times as much.

Accenture identified 22% of the survey population as masters.

Taking this profile forward, Accenture sought to learn how masters' practices differ. Per Segerberg, Partner at Qvartz, a management consultancy in Supply Chain Management, Procurement Transformation and Global Sourcing, takes a look at the findings in five key areas of procurement.

Vendor data and risk management: the next big question in the digitalisation of procurement

Schalk_vdMerwe_100.jpgIn order to optimise vendor ecosystems, companies consider various types of vendor-related information to determine which vendors are best suited to their supply chains. Companies, typically, limit this to information that is directly linked to quality, performance and price KPIs.

"However, an often-neglected, yet very important, element in the optimisation 'equation' is vendor company risk", says Schalk van der Merwe, Executive Head: Supply Chain Governance at data powered risk solutions provider Inoxico, in this month's SmartProcurement.

Fix the weak links in the supply chain with vetting

RudiKruger.jpgSuppliers play a huge role in the operational capacity of a business. With a mutually healthy relationship, trusted suppliers can help a business satisfy customer needs, even in a pinch. However, businesses that source goods or services from questionable suppliers run a great risk of failing to meet their own obligations to customers. Such weak links in the supply chain either present prominent or underlying risk and, while the one is evident, it is underlying risk that can only be identified through investigation.

In this month's SmartProcurement, Rudi Kruger, General Manager: Data Services, LexisNexis South Africa, contends that supplier vetting is the surest way to see the whole picture. "Working with the wrong supplier could cost you money and your customers' trust but, by vetting suppliers, many underlying risks can be identified."

Municipal materials management may require a counter-intuitive purchasing approach

StephenBauld_100.jpgEnsuring that the right quality of an item is ordered and delivered may seem like a fairly obvious responsibility. However, doing so in practice requires a fairly sophisticated understanding of market conditions and user requirements, which, like many organisations, municipal departments do not possess.

"There is a higher probability of generating measurable savings if municipal purchasing departments play a pro-active role to assist client departments to identify needs before they arise", says government procurement expert Stephen Bauld, in this month's SmartProcurement. Bauld argues that successful municipal materials management may require a counter-intuitive approach towards purchasing.

Procurement in 7 memes

DistractedBoyfriend_small.jpgThey say a picture tells a thousand words. How about a procurement meme?

Okay, millennials. Strap yourselves in, because Hugo Britt, Content Manager at Procurious, is going to attempt to meme. Is meme even a verb? Perhaps not, but that isn't going to stop him.

For older readers who don't really know (or care) what memes are, don't worry - Britt's got you covered. Whether it's Bad Luck Brian, Kermit Sipping Tea, or King Leonidas screaming "SPARTA", Britt will attempt to add a bit of context around the meme before applying a Procurement gripe to each.

Join Britt at Smart Procurement World Gauteng in September, where he'll present procurement's "guide to blockchain technology and how it will change our world". He'll look at early applications of blockchain in supply chain, specifically automotive, freight and logistics.

When supplier-employee relationships cross the line

RudiKruger.jpgProcurement fraud can be committed by employees acting alone or in collusion with suppliers. Fraudulent activities between suppliers and employees create a host of challenges for the business if allowed to continue under the radar.

With this threat, the onus rests with organisations to create a culture where fraudulent activities are easily identified and dealt with.

In this month's SmartProcurement, Rudi Kruger, General Manager of Data Services, LexisNexis South Africa, explains some of the ways in which employees collude with vendors.

Rewards of digital supply chains obscure dangers

AbdulMahomed.jpgJust as digital supply chains bring rewards, they also bring dangers. Supply chain managers are always on the lookout for corruption, but in the digital age the clues are harder to spot, warns Dr Abdul Majid Mahomed, Head of Professional Body CIPS, SA.

What is the true cost of unethical conduct?

XavierGreyling.jpg'Procurement irregularities' has taken 3rd place on Corruption Watch SA's Corruption Report 2017 (CRW2017). Coming in at 12% of the reported types of corruption, procurement irregularities trails bribery as the most common form of reported corruption (27% of cases).

However, CRW2017 does not define 'procurement irregularities', which caused Xavier Greyling (MCIPS) to question if procurement irregularities do in fact account for only 12% of the reported cases, and, faced with the possibility of a far higher figure - what role does procurement play in what is lost to corruption every day?

Hope in the face of rampant corruption and fraud in Procurement

RudiKruger_2017.jpgRampant corruption and fraud in the public and private sectors have plagued South Africa for many years. However, a glimmer of hope appears to have followed the State of the Nation Address (SONA) in February, after President Cyril Ramaphosa reassured South Africans that corruption, fraud and collusion in the public and private sectors will be fought with purpose and intensity.

"While the country waits to see significant change in addition to the recent cabinet reshuffle, the President's overall commitment to purge corruption is commendable", says Rudi Kruger, General Manager, LexisNexis Data Services.

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.

Whose services are your really procuring?

ToniJackson.jpgThe workforce is fundamentally changing and it's increasingly important that you can access the skills you need when, where and how you need them. But with the increase in corporate usage of external workers comes additional challenges and risks. Toni Jackson, Director of APAC at Fieldglass, an SAP company, in Sydney, unpacks the implications.

Digital innovation moves procurement risk and transparency forward

RudiKruger_2017.jpgThe act of obtaining or buying goods for business can be extremely complex. Compounded by numerous risks and time-consuming tasks, the additional pressures of procurement (like planning, supplier research, value analysis, price negotiation, contracts administration and inventory control) only add to the overall stress of the job. With so much to consider, the need for safe, efficient and reliable solutions to meet the demands of procurement are highly advantageous.

What is affecting procurement? Where is the profession going?

DuncanBrock_SPW.jpgThere's a lot going on. The changing and challenging times we currently face are probably greater than they've ever been. What is the implication for procurement? What do we need to keep abreast of and continually work on?

Duncan Brock, Director of the Chartered Institute of Procurement and Supply, offered his insights during his opening address at the SmartProcurement World Gauteng conference in September.

Set suppliers up for success and mitigate preferential procurement risks

 

Even if organisations are not doing business with organs of state, they may well form part of the supply chain of organisations to which the PPPFA directly applies. Therefore, they need to be aware of its scope and provisions.

Corporate businesses are actively seeking and supporting black-owned and black woman-owned Exempted Micro Enterprises (EMEs) and Qualifying Small Enterprises (QSEs) as suppliers to meet the stringent Preferential Procurement Policy Framework Act (PPPFA) regulations.

If successfully implemented, this approach could stimulate the desired growth and economic transformation as the B-BBEE Act intended from the start, by providing greater opportunities for small, medium and micro enterprises (SMMEs), particularly those owned by historically disadvantaged South Africans (HDSAs).

“However, while this is positive, merely complying with the PPPFA is not going to guarantee the success of SMMEs: there are factors outside the control of regulations and policies that need out-of-the-box solution,” Terence Gregory, CEO of Ecsponent Limited, told SmartProcurement.

Turning supplier information into procurement insight

 

RudiKruger_2017.jpgDecisions and consequences go hand-in-hand. This is why having adequate, relevant information at your fingertips is a critical aspect of any decision-making process - more so when these decisions affect the operation of business and company reputation.

In procurement, the optimal goal is to manage risks and costs within a company, making it an imperative department of business. Businesses spend a significant amount of time vetting potential suppliers before embarking on a partnership, and pertinent data provides them with the right tools to make informed decisions with information that is easily interpreted by management.

However, the vetting system should not end when an agreement is reached between a business and its supplier. Intensive research and vetting on future and current suppliers should be a continual safety requirement to ensure all procurement legislation is adhered to, says Rudi Kruger, General Manager of Risk Solutions at LexisNexis Data Services, in this month’s SmartProcurement.


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