When proactive procurement meets risk mitigation: What’s in it for you? Part 2

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When proactive procurement meets risk mitigation: What’s in it for you? Part 2

If you think there is a typical day in procurement, think again. Too often, Chief Procurement Officers, Procurement Specialists, Buyers, Purchasers…(the list is long – and counting!) wear many hats.

The reason? Lately, the procurement and supply chain landscape has been under immense pressure: How does one keep supply chains uninterrupted in light of an ongoing pandemic, the Russia war on Ukraine – and many other elements – that have rattled global supply chains and manufacturing processes lately?

On that note, risk management has been topping off the charts as a permeating topic in today’s sourcing and supply management arena. To put it bluntly: In times with high degrees of volatility, the more dependency a company places on its existing suppliers, the more likely it is to take losses when it comes to meeting its commitments and milestones.

In an attempt to prevent disruption in supply anywhere along its supply chain, companies of all sizes have started looking into what proactive procurement can do for risk mitigation.

Following the popularity of our recent blog we’ve listed a few more lessons learnt on how proactive procurement boosts your existing advantages, by mitigating risk all along the supply chain.

Taut can mean brittle, so turn it into resilience

Diamonds are among the hardest materials on Earth—yet a single blow at the right angle will shatter it. That was the problem with many ultra-stretched, super-optimised supply chains from the pre-Covid era: a single point of failure puts the whole chain at risk.

Today’s ideal supply chain is more like rubber than diamond: able to flex and bend to meet changing conditions. It’s resilient, able to give the same outputs even if underlying inputs have to change.

But true resilience remains rare. In “The Route to a More Resilient Supply Chain”, research group Gartner found just 2 out of 10 managers described their supply networks as “highly resilient” pre-pandemic.

The proactive solution? It’s all about identifying those alternative suppliers ahead of time and forming a plan for switching if the need arises. And the data you need to do that goes beyond knowing that Supplier A makes the same widgets as Supplier B. It’s about their quality control, existing customers, and whether they’re located in the same region affected by the demise of your usual source.

Forewarned is forearmed. It’s another area Scoutbee can help with. AI-powered supplier search (called Streamline) gives you an up-to-date set of potential suppliers, ready to bridge the gaps in your supply chains the moment they’re at risk of breaking.

Work with your existing supply base, too

Second-sourcing is another one to resilience. But there’s another: working with your trusted suppliers NOW to form plans for overcoming adversity tomorrow.

While “scenario planning” is well-known, you don’t actually need to plan for a specific disaster. If your supplier’s metrics are falling against its competitors, a view of the entire landscape will flag this up—and you can talk to your supplier about it before it becomes a problem. In simpler terms, you’re reducing your own costs and risks, while helping your supplier stay competitive in its market, too. A win-win situation.

But it’s wise to plan for actual scenarios, too. Think of it the same way your Finance team handles budgeting. Good data lets you judge how important each supplier is, and therefore the risk you need to mitigate should they fail.

Letting you ask questions like: what can we do if a major shipping route is closed for a quarter? Or the price of a key raw material suddenly triples?

Once the risk is recognised, it can be planned for. Often, with the supplier you know and trust already. Again, it’s proactive not reactive. That’s what Scoutbee is all about.

Proactive procurement is risk mitigation

Whether you’ve opted (or are still considering some options) for alternative sourcing; contingency and scenario planning; wider supplier network diversification…to keep your procurement process up and running, Scoutbee’s rich suite of solutions, starting with Streamline, will come a long way. Wanna see it for yourself? Book a demo today!