A Short Guide to Procurement Risk

Increasingly, top executives view supply markets as sources of competitive advantage and as means of achieving strategic objectives. Procurement is the management activity that makes this happen, and this process depends on a superior risk management capability if it is be effective. Yet, despite its importance, Procurement Risk Management is surprisingly under-developed. Recent Global Risk surveys have pinpointed Supply Chain Vulnerability as one of the four key global risks for the next decade. What is less well known is that this is only half of the story ... risk exposures also exist inside the company and can be just as damaging. No company is an island; it needs suppliers as well as customers. Conventional wisdom puts great emphasis on managing certain aspects of business such as customers; operations; strategy and finances. Typically, however, much less regard is paid to external suppliers and the risks present in dealing with them. As a minimum, suppliers are the sources of materials, services and expert attention which enable the company to feed its business model. When done well, a risk-aware procurement process provides the bonus of competitive advantage, with the ability to capitalise, on the occurrence of unexpected events. This short guide explains just how to do it. Each chapter explores the topic in hand, outlines the risks and the remedies available and offers guidance on the principles and risk prevention.

Contents: Introduction; Procurement and risk - the big picture; External dependencies; Market conditions and behaviours; Procurement process; Management controls; Handling the unexpected; Procurement risk management - an integrated approach; Index.

Dr Richard Russill operates internationally as an adviser, presenter and writer on business issues, particularly in the areas of supply cost- and relationship- management. Success in these areas enhances profitability and also stimulates the dynamism and purposefulness of company performance overall. His work with companies across all business sectors, public and private, large and small, complements his direct management experience with a global company in production, project management, industrial relations, negotiations, organisational development, engineering, and procurement. Richard has published widely, is co-author of the negotiation handbook It's A Deal, and author of Purchasing Power. He advocates the emerging idea of RROI: Renewable Return on Investment; is creator of the Centre-Led Action Network organisational concept ('CLAN'); and is widely-known internationally as a speaker on this and other business issues. He has advised the Juran Institute in Europe as facilitator for their international procurement best-practice benchmarking process, and is a visiting lecturer on negotiation for the MSc programme at Hong Kong University. In late 2002 Richard was honoured by the Chartered Institute of Purchasing and Supply in receiving the prestigious Swinbank Award for his 'outstanding contribution to the profession' and for carrying its message into the business community at large.