Procurement Risk Management

Effective procurement risk management is critical for businesses to ensure that they are not exposed to unnecessary risks that can negatively impact their bottom line. Procurement risks can arise from various sources, such as supplier non-performance, quality issues, and price volatility.

To mitigate these risks, companies must conduct a comprehensive procurement risk assessment and implement strategies to minimize potential threats.

Transcript

1. Procurement Risk Management • Your Company Name
2. 2 Basic Approach to Risk Management Supplier Risk Events Integrated View of Risk Procurement Risk Management Program Steps Risk Management Process Challenges to establishing a Risk Management Program Mitigating the Supplier Risk and protecting Supply Chain Conclusion & Recommendations Benefits of opting for Risk Management Services Content
3. Basic Approach to Risk Management 3 Strategic Compliance Financial Operational Identify areas of Risk Risk avoidance Risk reduction Risk sharing Risk Mitigation Disruption in upstream suppliers Geo-political risks Commodity risks Currency risks Corrupt practices Force majeure Bankruptcy Legal issues Environmental issues Labour issues Identify Critical Risk This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Risk management should be a continuous & evolving process that addresses all the risks associated with the organization’s past, present & future activities. Some global companies have developed in-house risk management departments establishing specific objectives pertaining to their organization & have aligned the risk management initiative to meet the organization’s business goals.
4. Integrated View of Risk 4 FCPA, anti – bribery Text here Text here Technology – related events Internal organizational events External market events Supplier risk events Suppliers & sub-suppliers Alliances Joint ventures Outsourcing providers Contract (hourly) Other third parties Internal Ecosystem An Integrated View of Risk As an integrated view of risk takes root in more businesses, executives are thinking more broadly about the risks their company faces. Many of the most significant ones are driven by relationships with other entities, such as service providers, alliances and joint ventures This slide is 100% editable. Adapt it to your needs and capture your audience's attention.
5. Supplier Risk Events 5 Supplier inability to support new product/service introductions Supplier inability to obtain trade finance ▪ Cost ▪ Service ▪ Response time Rapid degradation of supplier performance ▪ Violations of immigration law ▪ Sweatshop conditions ▪ Unsustainable environmental waste ▪ Tax evasion Unacceptable Supplier Practices ▪ Unmet expectations on costs ▪ Customer satisfaction ▪ Productivity ▪ Quality Failure of an outsourcing strategy This slide is 100% editable. Adapt it to your needs and capture your audience's attention.
6. Benefits of opting for Risk Management Services 6 Greater lead time in the event of a risk materializing ▪ Central platform for all the information ▪ Minimize downtime & increase preparedness in the event of a disaster ▪ Monitor the effectiveness of the program ▪ Understand future risk Reduced Cost ▪ Eliminates training cost – by managing risk with ready – trained skills & proficient personnel ▪ Readily available information – risk management firms have access to experts who are spread across the numerous industries & who provide their expertise real-time ▪ Risk management tools – developing in house or acquiring external tools for monitoring risk effectively This slide is 100% editable. Adapt it to your needs and capture your audience's attention.
7. Step 1 Establishing the overall goals of the program Step 2 Gathering the data needed to manage the process (e.g., supplier spend levels, performance data, price & cost trends, demand forecasts, upcoming contractual milestones). Step 3 Monitoring the supply base for problem & opportunities. Step 5 Prioritizing risk mitigation efforts by segmenting supply categories by complexity & importunate. Step 7 Measuring overall risk exposure level, taking into account the maturity of the market, complexity of the solution, etc. Step 9 Refining the plan through consideration of the impact of knows events Step 4 Creating mitigation plants for the types of events that might leave the company exposed. Step 6 Identifying potential risk events by supply category. Step 8 Assigning a monetary value to the potential impact of each risk event (e.g., margin at risk, cost of lost productivity, cost of schedule changes. Procurement Risk Management Program Steps 7 This slide is 100% editable. Adapt it to your needs and capture your audience's attention.
8. Risk Evaluation Identification Critical Categories & Suppliers Business Continuity Plans Continuous Monitoring Risk Management Process 8 This slide is 100% editable. Adapt it to your needs and capture your audience's attention.
9. Overview of the Process 9 Identification of critical categories & suppliers ▪ Financial impact ▪ Supply dependencies ▪ Source of competitive advantage Risk evaluation ▪ Supply chain mapping & risk analysis ▪ Supplier risk analysis ▪ Disruption monitoring Business continuity plans ▪ Alternate sourcing locations ▪ Alternate supplier identification Continuous monitoring ▪ Real time or periodic monitoring of suppliers, category & other supply chain entities Beroe Risk Management This slide is 100% editable. Adapt it to your needs and capture your audience's attention.
10. Identification Critical Categories & Suppliers 10 This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Low High Low High Supply Complexity Profitability Impact Medium critical categories Commodity high profitability impact substitutes available many equivalent suppliers Medium critical categories Unique product specs limited supply base difficult to substitute limited profitability impact Highly critical categories High profitability impact unique product specs critical technology limited supply base difficult to substitute Low critical categories Commodity substitutes available many equivalent suppliers limited profitability impact Supplier criticality criteria Total Supply Base Medium critical suppliers Highly Critical suppliers Low critical suppliers
11. Risk Evaluation 11 Supply chain mapping & assessment of following parameters across all the tiers Supply chain mapping & risk analysis Supply & price risk of downstream raw materials Key risks in the supply chain Risk from alternate demand segments Critical lower tier suppliers Geographic dependency risks Critical lower tier materials Your text here Critical sourcing locations Your text here Critical logistics hub Supplier risk analysis Your text here Key risks faced by the supplier Historical supply disruptions & impact Financial & qualitative risk score with the supplier categorized into low, medium or high risk bucket Risk management practices with respect to raw material price volatility, interest rate fluctuations, currency rate fluctuations etc Your text here Adherence to quality standards Your text here Your text here Your text here Your text here Your text here Disruption monitoring Monitoring of suppliers & supply chain entities Real-time or periodic alerts on disruption or supply market developments Risk Evaluation Key Outputs This slide is 100% editable. Adapt it to your needs and capture your audience's attention.
12. Business Continuity Plans 12 Following the risk evolution phase, business continuity plans can be created based on the risk profile of supplier for mitigating risks. The business continuity plans cover alternate sourcing locations & suppliers based on the requirement of the business. Some of the criteria used fir shortlisting alternate suppliers or sourcing locations are listed below Alternate sourcing location ▪ Regional production volumes ▪ Net exports volumes ▪ Business environment ▪ Macro-economic scenario ▪ Your text here ▪ Your text here ▪ Availability of grade/service level ▪ Available capacities ▪ Comparative risk ▪ Your text here ▪ Your text here Alternate supplier identification This slide is 100% editable. Adapt it to your needs and capture your audience's attention.
13. Continuous Monitoring 13 It involves real-time or periodic tracking of the critical supply chain entities for developments. This in addition to improving the visibility also enable the companies to reduce the ‘Time to Respond’ & ‘Time to Recover’ in case of any supply disruption. It would also help in building intelligence on supply markets Critical supply market developments Supply chain entities Critical suppliers Critical low-tier suppliers Critical logistic hubs Critical sourcing locations Monitoring This slide is 100% editable. Adapt it to your needs and capture your audience's attention.
14. Challenges to establishing a Risk Management Program 14 Procurement is held responsible for supply risk but lacks a mandate or resources to address the issues Procurement does not have an explicit supplier risk measure as part of supplier scorecard Procurement has not had major issues yet, & until there is a significant event, will not invest seriously Procurement struggles to fund the supply risk “insurance policy” versus other “hard-dollar ROI”projects Supply risk is too big a responsibility with too many stakeholders & risk factors to manage well Procurement mostly reacts to risk to ensure regulatory compliance rather than get ahead of the problem 85% 65% 55% 45% 35% 25% 30% 26% 22% 19% 12% 5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Critical challenge Major challenge This graph/chart is linked to excel, and changes automatically based on data. Just left click on it and select “Edit Data”.
15. Integrate risk mitigation and dependency into the sourcing process Certify Choosing a supplier has inherent risk. A strong sourcing process mitigates that risk, and incorporating risk into your current metrics can help ensure that suppliers coming into your organization can meet business requirements and will be able to successfully deliver their product or service Identify the suppliers that have the most impact on your business Monitor Not all suppliers are of equal value in your supply chain. Stratify them into categories that make sense for your business Enrich internal data with third-party information to increase visibility and create actionable intelligence Analyze Technology in today's marketplace combines the data automatically to reduce the amount of time and resources required to manually analyze and create reports Develop disaster recovery plans in the event of supplier failure Mitigate One cannot predict supplier failure with 100 percent certainty. But one can protect your business by planning for it. Proactively prepare for these potentially damaging supplier disruptions by having alternative source strategies in place. Develop supplier contingency plans by documenting competitive suppliers and continually researching for new suppliers Mitigating the Supplier Risk and Projecting Supply Chain 15 This slide is 100% editable. Adapt it to your needs and capture your audience's attention.
16. Identify and leverage the burning platform This helps obtain support from the business for the new or revised process, whether it’s safety, security or some type of business- continuity platform Measure and monitor the changes and benefits from the new process Make sure to document successes and use them to continue the momentum. Again, make sure that the measurement systems are updated in order to keep risk management top-of mind Use supply intelligence and scenario planning These tools identify the universe of potential supply-risk events (including both frequency and severity. Formally document the findings and, more important, ensure that key stakeholders understand and accept the findings Identify potential risk mitigation and contingency steps required This will help avoid or at least minimize the frequency and severity of the risks. Know the risk position and associated costs by developing options with associated timelines, resourcing & costs Conclusion & Recommendations 16 This slide is 100% editable. Adapt it to your needs and capture your audience's attention.
17. Procurement Risk Management Icon Slide 17
18. Coffee Break 18 We’ll come Back In 10 Min This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Text Here This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Text Here This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Text Here
19. 19 Charts & graphs
20. Area Chart 20 0 10 20 30 40 50 60 70 80 90 100 FY '13 FY '14 FY '15 FY '16 FY '17 FY '18 FY '19 Sales In Percentage(%) This graph/chart is linked to excel, and changes automatically based on data. Just left click on it and select “Edit Data”. Product 01 This graph/chart is linked to excel, and changes automatically based on data. Just left click on it and select “Edit Data”. Product 02 This graph/chart is linked to excel, and changes automatically based on data. Just left click on it and select “Edit Data”.
21. Column Chart 21 1 1.5 2 2.5 3 3.5 4 5 6 0 2 4 6 8 10 2011 2012 2013 2014 2015 2016 1017 2018 2019 Expenditure In ($ Billions) Years This graph/chart is linked to excel, and changes automatically based on data. Just left click on it and select “Edit Data”. Product 01 This graph/chart is linked to excel, and changes automatically based on data. Just left click on it and select “Edit Data”. Product 02 This graph/chart is linked to excel, and changes automatically based on data. Just left click on it and select “Edit Data”.
22. 22 Additional Slides
23. 23 This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Mission This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Vision This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Goal Our Mission
24. Valued Clients This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Target Audiences This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Preferred by Many This slide is 100% editable. Adapt it to your needs and capture your audience's attention. About Us 24
25. Name Here Designation This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Name Here Designation This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Name Here Designation This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Our Team 25
26. 26 This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Goal 1 This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Goal 2 This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Goal 3 Our Goal
27. Financial 27 This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Maximum This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Minimum This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Medium 50% 70% 90%
28. 28 Idea Generation This slide is 100% editable. Adapt it to your needs and capture your audience's attention. 01 This slide is 100% editable. Adapt it to your needs and capture your audience's attention. 02 This slide is 100% editable. Adapt it to your needs and capture your audience's attention. 03
29. Puzzle 29 01 04 03 02 This slide is 100% editable. Adapt it to your needs and capture your audience's attention. This slide is 100% editable. Adapt it to your needs and capture your audience's attention. This slide is 100% editable. Adapt it to your needs and capture your audience's attention. This slide is 100% editable. Adapt it to your needs and capture your audience's attention.
30. Venn 30 Text Here This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Text Here This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Text Here This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Text Here This slide is 100% editable. Adapt it to your needs and capture your audience's attention. 01 02 03 04
31. Timeline 31 2016 2017 2018 2019 This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Your Text Here This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Your Text Here This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Your Text Here This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Your Text Here
32. Swot 32 Strengths This slide is 100% editable. Adapt it to your needs and capture your audience's attention. S Weaknesses This slide is 100% editable. Adapt it to your needs and capture your audience's attention. W Opportunities This slide is 100% editable. Adapt it to your needs and capture your audience's attention. O Threats This slide is 100% editable. Adapt it to your needs and capture your audience's attention. T
33. Magnifying Glass 33 This slide is 100% editable. Adapt it to your needs and capture your audience's attention. This slide is 100% editable. Adapt it to your needs and capture your audience's attention. This slide is 100% editable. Adapt it to your needs and capture your audience's attention.
34. Quotes 34 Opportunity is missed by most people because it dresses in overalls and looks like work. ... Thomas Edison
35. Comparison 35 Maximum 90% Minimum 45% This slide is 100% editable. Adapt it to your needs and capture your audience's attention. This slide is 100% editable. Adapt it to your needs and capture your audience's attention.
36. 36 Mind Map This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Text Here This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Text Here This slide is 100% editable. Adapt it to your needs and capture your audience's attention. Text Here
37. Thank You 37 Address: # street number, city, state Contact Numbers: 0123456789 Email Address: emailaddress123@gmail.com