Risk Management in the Supply Chain

“Risk comes from not knowing what you’re doing.”
(W. Buffet)

Risk Management in the Supply Chain

The main risk of the 21st century is lack of knowledge! If we don’t have enough knowledge of our procurement department and our company in general, it is very likely for us to become run over by the competition before even becoming aware of it. We have already emphasized the importance of strategic procurement, but in fact, the most important goal of this business approach is risk management. Risk management begins with risk analysis, which is a process of identifying potential situations where things can go wrong and predicting the probability for each one of them to occur. This way, risky situations can be reduced to a minimum. However, if it comes to them, the company won’t have to make ad hoc decisions because all situations will be clearly and strategically defined.

Strategic planning can be defined as a perspective for the future, which analyzes the present and creates expectations for future situations. It defines the direction and means for achieving goals set (also called mission). Risk analysis is a part of the process of strategic procurement development, but also of the development of companies as a whole. A well-defined analysis methodology enables timely identification of potential risks and their objective estimation.

A good strategic plan should:

  • address critical areas of success
  • create a balance between what Procurement can do and what Procurement wants to do
  • cover the time period long enough to close the range of performance
  • be visionary – transmit the desired future and state
  • be flexible – allow and enable changes
  • manage decisions at lower levels – operational, tactical and individual

Planning is linked to flexibility – strategic planning is often considered a precondition for flexible decision making. In general, strategic planning encourages a proactive attitude towards the future. If the strategy is well elaborated, almost all the situations in which a company can be found will be covered, so uncertainty will be removed. The vision of the future will thus be much clearer for everyone. All in all, strategic planning leads to improved results and increased performance, while the mindset within the company becomes much more long-term oriented.

Give yourself enough time and attention to define your procurement strategy, or hire a consulting agency to help you. Don’t hesitate – investing in your strategy is an investment in success. In order for your strategy to give you the best results, choose a reliable procurement software as a support. Such software will allow you to access the data at any time and provide real-time insight into your current situation so you will be able to predict the future objectively. With Ensolva, analyze your Procurement and track the performance of your business. Don’t let lack of knowledge get in the way to your success!

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