Mindset
Too often we procurement people are introverts and stand back, rather than lead forward into leadership opportunities. This is a perfect opportunity. Although, legal, IT, finance, and other teams need to participate, by definition ‘SUPPLIER’ risk management opens the door for procurement leadership. We keep saying that procurement is more than just cost savings – holistic risk management is a perfect opportunity to lead another critical function across the enterprise. BTW, the risk teams often lack the sensitivity to the impact of over-rotating on risk and due diligence. Too many delays due to risk management will simply cause the business to work around the process; undermining both the goals of risk management and eroding procurement efforts to get an early seat at the table. ALWAYS remember that we exist to ENABLE BUSINESS SUCCESS. That requires a keen understanding of business priorities and the ability to balance, risk, speed, innovation, quality, etc.
Remember that you aren’t a procurement person – you are a business leader who happens to be working in procurement.
Management Support
I suggest that you simply add “supplier risk management” as a new item on your go-forward objectives. Since the early efforts are organizing and influence – you should be able to tackle this project on the margin. Don’t ask for resources yet. After you have alignment with Legal, IT, and Finance, you should be able to get appropriate resources allocated. If you need help building your management and cross-team influence path, IM me and I’ll be happy to jump on a quick call to help you brainstorm a path forward.
Influence risk organizations
Legal, IT, Finance, and other organizations care about a small part of supplier risk management. While they are working hard to deal with the risk in their scope, they also (typically) see the value of better collaboration. They also get great value from the comprehensive view of the supplier portfolio that only you can provide. One of the biggest concerns from these teams is that they might not be aware of a supplier that poses significant compliance, privacy, security risk, or so forth. YOU own that portfolio and are in a unique position to triage all existing and incoming suppliers to determine which require various risk evaluations. Imagine how cool it will be when you can provide a cross-functional risk scorecard for 100% of your suppliers. I know it sounds daunting – but with the right technology, it’s easier than you think.
Execute
The first three items just get you going. Now you need to execute. My observation from talking to hundreds of procurement teams – you are in good company. Most are still struggling to find an automated approach to holistic supplier management. You can do this with spreadsheets or patching together fragmented solutions. That’s ok for a little while, but it is possible to automate big portions of this work. It’s not a bad idea to start with manual processes, refine then automate. If you want some ideas on how to automate, give me a call and we can talk through some ideas and options. As you start to automate, remember that just because you CAN, doesn’t mean that you should as hundreds of questions and collect endless documents. Focus on what’s truly critical to your business goals and what’s needed to perform the proper level of due diligence. BTW, to create an effective program, you need to focus on risk management during sourcing (part of RFx consideration), onboarding, and ongoing. I have several best-practice templates for compliance (ethics), privacy, security, modern slavery and others; happy to share.
Several procurment leaders and I have spent the last 3-5 years working on automated (holistic) supplier risk management. I love to share ideas and collaborate. By sharing ideas, we can help move procurment forward as we continue to build leadership, value and credibility for the enterprise.
About the author: I have almost 30 years of enterprise procurement experience. I started my career at Intel when we were doing procurment with triplicate (white/pink/yellow) purchase requisitions. I’ve dedicated my career to streamline and automate the procurement process. During the 90’s I was an early web developer automating many aspects of the procurement process from PO lookup tools, contract and cost savings databases. Even with over 20 years of various procurement tech solutions, we are still just scratching the surface. We’ve replaced the fax machine with email. But there are been too many empty promises of automation from the big names in procurement tech. Those of us who have lived through the last 30 years of procurement see huge opportunities to automate. Lets work together and make a difference.