“Faith in your new apprentice, misplaced may be, as is your faith in the dark side of the Force.”―Yoda to Palpatine (Revenge of the Sith)
It’s the duel between the Jedi Master (Master Yoda) and the Sith Lord (Darth Sidious) when the Sith Lord tells that Yoda would see the real power of the dark side and Darth Vader would become more powerful than either of them. The Grand Master says to Sidious that maybe he has bestowed excessive faith in both the dark side of the force and his new apprentice (Darth Vader)
In the Procurement Galaxy: At times, hasn’t your faith when not gauged periodically and reaffirmed turned into an implicit faith which at some point has failed you even to the extent of being catastrophic? Consider those non-PO invoices that may have come your way and the suppliers following up for payments, maverick requisitioners ordering goods & services ignoring the negotiated contract with the vendor of choice, overpaid invoices to suppliers, suppliers not complying with the crucial regulatory requirements to name a few. And all this is happening, when you thought your house was in order! Reaffirmation of your belief by periodic gauging is necessary for ensuring compliance & risk mitigation.
So how can procurement tackle the fall outs of implicit faith within their function?
As a procurement exec, you may have created watertight contracts with your suppliers, but this itself is not going to ensure your requisitioners will end up buying from these suppliers. What one needs are systems which help you intelligently link your contracts & suppliers to the buying process by guiding end users to the right category & suppliers. This goes a long way in reducing maverick purchases as well as reign in compliance to set procedures & policies, thereby realizing hard dollar savings from your negotiated contracts. Even at the invoice management stage, mapping invoices to POs/Contracts & Goods receipt helps in ensuring right payment to the suppliers.
Given the volatile macroeconomic environment we live in today, suppliers play a critical role in ensuring business continuity. Some of the best cost reduction business strategies like Lean Manufacturing, Just-in-time inventory and outsourcing try to optimize your supply chain. But this optimization also creates vulnerability in your supply chain. Stretched at the limit and interlinked at various key points with suppliers it cannot accommodate disruptions. Your business operations can be disrupted unexpectedly by the failure of even one of the many interlinked suppliers and can cause significant harm to you.
Collating information from internal and external sources, a Supplier Risk Management (SRM) system gives you a well-rounded view of your key suppliers. Giving you the ability to evaluate the health and performance of a supplier both quantitatively and qualitatively, it allows you to identify, measure and manage the risk and performance of your supply base. In short, SPM helps you mitigate the risk your key suppliers might pose to your enterprise because in business there is no room for Implicit Faith.
To learn more how you can go about setting up a compliant & risk-free procurement process, sign up for the upcoming webcast – WhiteBoard to Dashboard: Steps to implementing compliant and risk-free procurement processes.