Supply Management magazine recently reported a global survey in which almost half of Chief Procurement Officers named supplier risk as a top concern. Yet risk management did not feature as a top priority for the survey participants.
Hmm…
Another recent poll by CIPS revealed that “just a third of buyers have a supply chain risk mitigation strategy”—a finding that’s quite interesting, and a bit disappointing.
As custodians of third-party spend and supply, surely Procurement should be protecting the enterprise through robust risk management in our sphere of organizational activity—isn’t this part of doing the Procurement job effectively?
Or are too many Procurement people still trapped in a mindset of “cost savings” being the only end-game?
Putting dollars on the table will always be a de facto aspect of the Procurement job. But delivering bucket-loads of “cost savings” without adequate focus on protecting the enterprise through sound risk management is a bit like mining for gold without any protective gear—something disastrous could happen at any time. And it probably will!
Procurement people often have to dance the dance of the prevailing organizational dynamics; sometimes with panache and sometimes with two left feet. Senior executives in the organization may not act like they value good supply risk management—all too often the focus is on short-termism (until things go wrong). And this is habitually reflected in how Procurement is calibrated.
That notwithstanding, Procurement professionals must embrace risk management as a core functional responsibility.
As I elaborate in an article for Spend Matters, risk management is part and parcel of the Procurement job—read the article here.
