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The current situation, dominated by the health crisis and increasing pressure on supplies, means good supplier risk management has never been more important. This major challenge reinforces the strategic role of the procurement department in contributing to the success and performance of the company. In this context, the objective is to ensure the security of supplies in all circumstances, while controlling costs.<\/span>\u00a0<\/span><\/p>\n In addition to <\/span>selecting\u00a0quality\u00a0suppliers<\/span> and ensuring that their contracts are properly executed, sound supplier risk management is above all based on forecasting. Early identification of the risks to your supply helps you to prevent potential stock depletion, and also to gain a better understanding of the tensions likely to impact the smooth running of the supply chain. It is, therefore, important for the procurement department to monitor and establish a precise and exhaustive map of supplier risks, regardless of their tier in the supply chain.<\/span>\u00a0<\/span><\/p>\n Firstly, supplier\u00a0risk\u00a0management\u00a0requires\u00a0that\u00a0all information\u00a0relating\u00a0to\u00a0procurement\u00a0is\u00a0<\/span>integrated across the company’s operational systems, in real-time<\/span><\/b>.<\/span>\u00a0<\/span><\/p>\n This highly strategic database must then be segmented into different risk categories related to your suppliers. This includes <\/span>financial, contractual, business, and technical risks, as well as CSR (Corporate Social Responsibility) risks<\/span><\/b> that\u00a0could\u00a0affect\u00a0your\u00a0image,\u00a0your\u00a0business, and\u00a0your\u00a0performance. In addition,\u00a0there\u00a0may\u00a0be\u00a0geopolitical,\u00a0meteorological\u00a0or\u00a0climate\u00a0threats\u00a0depending\u00a0on the country\u00a0where\u00a0your\u00a0suppliers\u00a0are\u00a0located. The more\u00a0precise\u00a0the\u00a0categorisation\u00a0of supplier\u00a0risks, the\u00a0easier\u00a0it\u00a0will\u00a0be\u00a0for\u00a0procurement\u00a0departments\u00a0to\u00a0anticipate\u00a0them.\u00a0Your\u00a0predictive\u00a0analysis\u00a0capacity\u00a0and the\u00a0operational\u00a0management of\u00a0your\u00a0supplies\u00a0will\u00a0be\u00a0considerably\u00a0improved. You\u00a0will\u00a0thus\u00a0be\u00a0able to\u00a0develop\u00a0alternative\u00a0strategies\u00a0very\u00a0early\u00a0on to\u00a0overcome\u00a0any\u00a0unforeseen\u00a0events.<\/span>\u00a0<\/span><\/p>\n Of course, to\u00a0be\u00a0truly\u00a0efficient,\u00a0such\u00a0a\u00a0database\u00a0needs\u00a0to\u00a0<\/span>be\u00a0regularly\u00a0updated<\/span><\/b>. By\u00a0definition, supplier\u00a0risks\u00a0do not\u00a0constitute\u00a0intangible data.\u00a0They\u00a0vary\u00a0according\u00a0to the\u00a0circumstances\u00a0and must,\u00a0therefore,\u00a0be\u00a0continuously\u00a0updated\u00a0within\u00a0the\u00a0company.<\/span>\u00a0<\/span><\/p>\n A good map of supplier risks also depends on the quality of the relationship you have with them. The more it’s based on <\/span>trust and\u00a0transparency<\/span><\/b>, the more\u00a0it\u00a0will\u00a0enhance\u00a0your\u00a0ability\u00a0to\u00a0make\u00a0predictions. The\u00a0richness\u00a0of the exchange and the\u00a0quality\u00a0of the\u00a0human\u00a0relationship\u00a0remain\u00a0essential\u00a0from\u00a0this\u00a0point of\u00a0view. As Gr\u00e9goire\u00a0Koudrine,\u00a0Supply\u00a0Chain\u00a0Director\u00a0of the Manutan Group, stresses, the secret lies in\u00a0your\u00a0ability\u00a0to “<\/span>get\u00a0your\u00a0various\u00a0stakeholders to talk to\u00a0each\u00a0other\u00a0and\u00a0collectively\u00a0define\u00a0turnover, sales and,\u00a0therefore,\u00a0supply\u00a0assumptions, in the\u00a0interests\u00a0of\u00a0better\u00a0risk\u00a0management.<\/span><\/i>“<\/span>\u00a0<\/span><\/p>\n The Covid-19\u00a0crisis\u00a0has\u00a0shown\u00a0how essential\u00a0it\u00a0is\u00a0today\u00a0to\u00a0create\u00a0logistics\u00a0chains\u00a0that\u00a0are\u00a0both\u00a0resilient\u00a0and\u00a0sustainable\u00a0for\u00a0your\u00a0business. In a<\/span>\u00a0<\/span><\/a>study devoted to this subject<\/span><\/a>, the Cap Gemini\u00a0firm\u00a0identified\u00a0four major\u00a0resilience\u00a0criteria\u00a0for a\u00a0supply\u00a0chain:<\/span>\u00a0<\/span><\/p>\n To create favourable conditions for supply chain resilience, procurement departments must avoid becoming dependent on their suppliers. <\/span>Increasing\u00a0the\u00a0number\u00a0of\u00a0trusted\u00a0partners\u00a0as\u00a0well\u00a0as\u00a0refocusing\u00a0logistics\u00a0chains\u00a0on\u00a0more local\u00a0markets<\/span><\/b>\u00a0are\u00a0among\u00a0the key levers of action to\u00a0adopt.<\/span>\u00a0<\/span><\/p>\n Another\u00a0consulting\u00a0firm, McKinsey &\u00a0Company,\u00a0conducted\u00a0an<\/span>\u00a0<\/span><\/a>extensive survey of logistics managers<\/span><\/a>. It appears that many of them are now planning to increase the number of their suppliers in order to secure their supply, but also to conduct <\/span>nearshoring\u00a0operations<\/span><\/b>; i.e., relocating an activity, either directly to the country of origin or to a country close to the company. The goal is, of course, to achieve productivity gains, but also to guard against unpleasant surprises linked to an offshore activity and an excessive geographical distance from suppliers.<\/span>\u00a0<\/span><\/p>\n Including\u00a0CSR at the\u00a0heart\u00a0of a\u00a0company’s\u00a0purchasing\u00a0policy<\/span> is inseparable from supplier risk management. One could even say that <\/span>supplier\u00a0risk\u00a0management\u00a0is\u00a0one of the main\u00a0pillars\u00a0of\u00a0sustainable\u00a0procurement<\/span><\/b>. Indeed, no sustainable purchasing strategy can exist without the development of real supplier risk assessment and prevention tools. On the agenda: CSR action plans for suppliers, dispute management methods, payment deadlines, etc. In total, 14 indicators make it possible to assess the truly sustainable dimension of your procurement policy and thus, again, the quality of the relationships you maintain with the partners in charge of your supplies.<\/span>\u00a0<\/span><\/p>\n Once\u00a0again, vigilance\u00a0is\u00a0required, as\u00a0<\/span>any\u00a0failure\u00a0in\u00a0this\u00a0area can\u00a0immediately\u00a0translate\u00a0into\u00a0image and performance\u00a0risks,\u00a0with\u00a0financial\u00a0impacts<\/span><\/b>. For example, all it takes is for a supplier to be criticised for the poor quality of its management, the unreliability of its products\/services, or the inadequacy of its own environmental approach, and the scandal can also tarnish the contractor. Systematic auditing of your suppliers’ CSR policy is undoubtedly the best way to improve your risk management.<\/span>\u00a0<\/span><\/p>\nCreate an integrated and segmented supplier database<\/span>\u00a0<\/span><\/h2>\n
Promote exchange and transparency with your suppliers<\/span>\u00a0<\/span><\/h2>\n
Create the conditions for resilience in the company<\/span>\u00a0<\/span><\/h2>\n
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Promote a sustainable procurement policy<\/span>\u00a0<\/span><\/h2>\n