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.
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 organisational 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 organisational dynamics; sometimes with panache and sometimes with two left feet. Senior executives in the organisation 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.