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How well do you manage supplier risk?

Or do you not manage it at all? Reducing supplier risk and having greater transparency is crucial to businesses across Australia.

Every day we read about fraud, suppliers going into receivership and not being able to fulfil orders, workers with a history child abuse, contractors not being insured and the list could go on and on.

In the current economic climate, managing supplier risk has become a top concern for Australian organisations. There is heightened pressure from all levels of Government, ICAC and investors due to the strategic, financial and operational impact that can result from supplier failure: disruption of service and product delivery, loss of revenue, increased costs, supply chain failure, and reputational damage.

Australian organisations are especially wary of the financial vulnerability of their suppliers and suffering any form of loss from critical suppliers failing. Failure in supply chain can impact the public perception of the product/service resulting in sales loss and adverse PR.

The majority of Australian organisations do not have a formal program or the necessary controls in place to manage supplier risk. They have limited visibility of their supplier base and are unable to identify early warning signs.

The ability to automate the process of accrediting and vetting potential suppliers and actual suppliers is critical. Automated questionnaires to be completed by suppliers that are constantly reviewed, with data kept current to ensure the suitability of suppliers is paramount.

The following questions are just examples of information where organisations should have the answers at their fingertips:

  • How effectively are suppliers performing?
  • Which suppliers have current insurance in place?
  • Have criminal record checks been carried out where required?
  • Do any of the supplier’s directors have criminal records?
  • What percentage of the supply base can be categorised as at risk?
  • How can a new supplier’s ability be effectively measured?
  • How is supplier information coordinated across the organisation?
  • What are the supplier support costs?

If any of these questions start alarm bells ringing, perhaps it is time to assess your supplier risk. It is imperative that your organisation is able to efficiently review each supplier relationship, identify potential threats, decide where intervention is required and take appropriate action.

A ‘best-of-breed’ eProcurement solution is the best way to eliminate your risk and bring total transparency in dealings with your suppliers.

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Scott Graham

Scott Graham

Scott is the Director of Kinetic Information Systems, an Australian specialist software and services company. Kinetic are a company that are focused on solutions to organisational problems using best-in-class software. Taking time to understand your problems understand what you want and what you are trying to deliver, we offer practical solutions and employ structured methods to deliver those solutions on time and on budget. Kinetic help clients identify business value, manage risk and realise higher levels of success from their programmes and initiatives. We specialise in eProcurement, Business Intelligence and ERP solutions. You can connect with Scott via his <a href="http://www.linkedin.com/in/scottgrahamkinetic">LinkedIn profile</a> or <a href="http://www.kineticis.com.au">website</a>.

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