Identify and manage supplier risks to avoid hassles

2nd February 2018

Identify and manage supplier risks to avoid hassles

In many instances, the procurement function of supply chains is measured by its efficiency and success in sourcing reliable commodities and services at a reduced cost. Beyond cost savings, procurement departments also need to ensure that the business is exposed to minimal risk during the procurement process.

Risks are ever-present, however, some are more avoidable than others. This includes the effects of mistakes and failures by suppliers, which can have a disastrous impact on a business, says Rudi Kruger, General Manager of LexisNexis Data Services.

“Suppliers can fail you in many ways like supplying inferior quality goods and services, missing deadlines or even through data breaches,” Kruger explained.

“Quality disasters may result in additional costs to the buying firm, while failures in terms of timing will affect your ability to deliver to your customer. Suppliers may also enter into fraudulent relationships with employees, which creates opportunity for conflict of interest.”

Overall, these kind of risks affect the bottom line and reputation of a business, said Kruger.

When suppliers are not able to perform at their best, buyers need to be aware and ensure that they are always in a position to safeguard the operation when the need arises. This can be achieved through effective risk management, with the following tips in mind:

For more information, visit, https://www.lexisnexis.co.za/lexis-procurecheck and https://www.lexisnexis.co.za/lexisdiligence