Archive for July 2015

HOW TO SPOT SUPPLIER RISK DURING ON-SITE EVALUATIONS

Published on 9:53 AM By Procurement Professionals Of Somalia- PPS

HOW TO SPOT SUPPLIER RISK DURING ON-SITE EVALUATIONS

Visiting your suppliers in person provides a great opportunity to identify potentially risky behaviour. In this article, we explore what you should look for to ensure you’re working with safe, knowledgeable, and reliable suppliers.

Thanks to Spendrix for granting Procurious permission to republish this article. This article is the second in a series on how to identify various types of supplier risk.

In our last post, we discussed how to spot risky behaviour when communicating with suppliers. The second article in our series on identifying supplier risk explores what to look for during on-site evaluations.

While on-site evaluations aren’t required, visiting your suppliers can help you build better relationships and improve communication. Furthermore, visiting your suppliers on-site allows you to evaluate them for risky behaviours that could potentially affect your company.

Here are some things to look for the next time you visit a supplier on-site:

Training Capabilities

When you vet your suppliers, you make sure they are qualified to do the job at hand, right? A part of this vetting process includes ensuring your supplier’s employees are proficient. Therefore, when you arrive on-site, it’s definitely important to check out your supplier’s training capabilities.

Top suppliers will have dedicated classroom space, a well thought-out training course, and experienced instructors. When you’re on-site, simply ask to review their training course to get an idea of how well it is preparing your supplier’s employees to work with your company. Does the training cover how to properly work with any equipment employees may have to use, how to properly secure and transport goods, how to check and maintain equipment to ensure it’s working properly, or what to do in the case of emergency?

Employees should understand how equipment looks, feels, and sounds when operating properly in order to act quickly if the machine becomes unsafe. Remember, your supplier is only as safe as its employees.

If your supplier can not answer simple questions about their training program or it seems their course lacks substance, you may need to ask yourself if that supplier is the best fit for your company. Overall, your suppliers represent less risk to your business the better their employees are trained.

Properly Stored & Inspected Equipment

Another crucial risk factor to look for during on-site evaluations is how your suppliers store their equipment, spare parts and securement tools. The way that a supplier stores excess equipment can tell you a lot about their attention to detail and the value that they place on having their equipment be in excellent condition.

While on-site with a transportation vendor, have a look at their inspection areas. Inspection areas should be well lit, and have spare chains and straps to replace defective securement. It’s important that your suppliers are taking all measures to minimise violations and damage when transporting cargo.

In addition to securing cargo, also evaluate how well your supplier’s equipment is being maintained. Are tractors and trailers assessed for potential damage, parked in an organised and safe location, and repair areas kept clean? How promptly are mechanical issues taken care of? Are spare parts well organised and in safe locations for the mechanics to access them?

When visiting a manufacturing supplier, look how they treat their equipment as well. Is all the necessary Personal Protective Equipment available, clean, organised, and stored properly? Also, check their records to see if equipment is being professionally maintained and inspected on a regular basis.

Suppliers that do not properly maintain their equipment can put your company at serious risk. Poorly maintained equipment is one of largest safety concerns when working with suppliers. If your supplier neglects their equipment, this directly impacts your business.

Visual Inspections of Equipment

In addition to how your supplier stores their equipment, do they keep it up to date and safe? When performing an on-site evaluation, take an opportunity to perform your own assessment of your supplier’s equipment for physical damage. Identify things that could lead to supplier error, and thus, put your business at risk.

When evaluating transportation vendors, check tires for adequate tread and proper inflation. Inspect trailers for any internal or external damages. Also make sure securement equipment is functioning properly. If on-site with a manufacturing supplier, examine equipment for exposed wires, burning smells, abnormal movements, or odd noises. Also, verify that the proper machine guarding equipment is being used.

Ensuring your supplier properly maintains their equipment can help to reduce the potential for errors. Therefore, it is crucial while on-site to inspect your supplier’s equipment, and in turn, protect your business.

Proper Compliance

A final way to minimise risk when performing an on-site evaluation of your supplier is by inspecting how they handle compliance. Does your supplier maintain organised and up to date logbooks? Do they have a detailed understanding of hours of service regulations, and work to avoid violations? Also, have they had any recent drug or alcohol violations? Or even worse, are there any drugs or alcohol on-site?

In addition, are there proper accident prevention signs in visible, high traffic areas? Is there easily accessible first-aid medical equipment in case of an emergency? The first-aid kit should be tailored to your supplier’s specific work environment and associated risks. It can also be necessary to have employees trained in first-aid, CPR, or responsible for certain emergencies.

By evaluating your suppliers for compliance issues, you are communicating your company’s values. You also can spot risky behaviours before they dramatically impact your company.

Overall, on-site evaluations allow you to get a closer look at your supplier’s day-to-day practices, and determine if they are the best fit for your company. If your suppliers do not have an effective training program, properly store or maintain their equipment, or follow proper compliance protocol, it may be time to look elsewhere for your business’s needs.

Ben is a business development professional currently working with Spendrix. He enjoys the challenge of helping a young company grow. Ben is passionate about risk analysis, business administration, and technology issues affecting the transportation and logistics industry.

by Ben Goldwasser

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3 TIPS TO GET YOUR PROCUREMENT FUNCTION FIT FOR PURPOSE

Published on 9:50 AM By Procurement Professionals Of Somalia- PPS

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3 TIPS TO GET YOUR PROCUREMENT FUNCTION FIT FOR PURPOSE|

When making a purchase, consumer law states that the goods you buy must be fit for purpose..

This blog has been developed and published for Procurious by Proxima.

In short, this means that any goods that you purchase must be able to perform the tasks or functions that they were designed to be able to complete. But, in the wider sense, fit for purpose is also a term used to describe anything (including a business function) that is able to deliver its objectives and provide a satisfactory level of service.

Is your procurement team fit for purpose?

So what constitutes a satisfactory level of service when it comes to procurement? Is a procurement team that focuses solely on squeezing suppliers on price, continually driving bigger and bigger savings (but alienating its suppliers in the process) a satisfactory function? We think not.

Don’t get me wrong – there is no denying that a good procurement team is one that is able to meet savings targets, but a great one, well that’s slightly more complex. A great procurement team is one that recognises the importance and impact of its supply base on its own corporation’s operations. One that collaborates with its suppliers, coaching, motivating and incentivising them all towards the goal of creating a fully engaged supplier base aligned with, and able to contribute towards, the organisation’s wider corporate aims.

By this definition then, there are an alarming number of procurement functions even within some of the world’s biggest organisations that are not fit for purpose.

And with an average of 70% of a businesses’ revenues spent on suppliers, that’s a significant amount of spend that is likely not being used to the best of its ability.

Making the change

Clearly then, ensuring that your procurement team is fit for purpose, can have a dramatic impact, not just on the way that your suppliers view your organisation, but on profitability.

Below are 3 simple tips to ensure your procurement function is fit for purpose:

Upskill your procurement team: With two-thirds of CPOs still citing lack of resource as one of their key challenges, it’s no surprise that the trend towards upskilling is an increasingly popular one. As a recent panel of industry experts discussed, the procurement team of the future will be one that encompasses a diverse set of people from various backgrounds, with a large and varied skill set.
Communicate value upwards: Procurement professionals are no stranger to the often negative perceptions associated with the function. Overcoming this perception problem starts with communicating its true value. Sharing various achievements (outside of savings metrics) in the form of supplier-led innovations or mitigated risks with the wider business will help shift perceptions of procurement away from that of the “savings guys” toward that of a key business function capable of contributing to the corporation’s wider aims and objectives.
Become a strategic partner to the wider business: A recent piece of research by The Hackett Group highlighted that “elevating the role of procurement to a trusted advisor within the business” was the key issue for procurement in 2015. How can this be achieved? Communication is key. Take the time to approach business leaders throughout the organization and learn about their challenges and strategies. By taking the time to listen to other business functions and understand what they need from procurement, you encourage the perception of procurement as a strategic partner.

So, in short, ensuring that your procurement team is fit for purpose is a complex, but achievable task. By taking into account these suggestions for expanding current capabilities, communicating achievements and aligning with the wider corporate agenda, you can elevate your procurement team beyond its conventional role – creating a function that is not just fit for purpose, but one that excels.

What steps are you taking to get your procurement function fit for purpose? Are you building the procurement team of the future or concentrating on changing negative perceptions of the function?

Proxima is a procurement specialist, offering a different approach to in-house sourcing, through close collaboration with clients across a number of industries including manufacturing, retail, financial services, engineering, FMCG, professional services and the public sector.

BY JONATHAN COOPER-

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SUPPLY CHAINS AS TOP CHALLENG

Published on 6:04 AM By Procurement Professionals Of Somalia- PPS

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BUSINESSES SEE RISKY SUPPLY CHAINS AS TOP CHALLENG

New survey says risky supply chains are a challenge for 77 per cent of businesses across North America and Europe.

Xchanging report says 77% of businesses see risky supply chains as challenge

Xchanging have recently issued the results of the second portion of its Procurement Study.

The survey polled 830 procurement decision makers regarding what they view as the top threats in the Procurement space.

Procurious covered the previous research here.

Xchanging’s research reveals the greatest external challenge for businesses’ operations is supply chain risk, with more than three quarters (77 per cent) of respondents claiming this is a challenge, and 17 per cent an ‘extreme challenge’.

Around two thirds of respondents claim to be challenged by regulation and audit (71 per cent); lack of supplier innovation (63 per cent); and fluctuations in currency (58 per cent) in their business operations.

Owing to the high number of respondents challenged by supply chain risk, Xchanging dug further into the specific supply chain threats faced by European and North American businesses.

Greek debt crisis and oil prices are both causes of concern

More than a quarter of respondents (28 per cent) see currency and exchange rate fluctuations as a significant external threat. This jumps to 35 per cent in respondents from mainland Europe, with the Euro still under pressure against the Pound and other major currencies, and nervousness in the region over Greece’s debt negotiations.

Similarly more than a quarter of respondents (26 per cent) also cite oil prices as a major external threat to their businesses. Notably global oil prices having fallen sharply in recent months (by more than 40 per cent since last summer), leading to significant revenue shortfalls in many energy exporting nations and concerns about oversupply in some markets.

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TALENT’ IN PROCUREMENT

Published on 6:01 AM By Procurement Professionals Of Somalia- PPS

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WHAT DO WE REALLY MEAN WHEN WE TALK ‘TALENT’ IN PROCUREMENT?

Depending with whom you speak, you get very different views on the subject of talent in procurement.

When we say talent, we don’t mean the ability to sing, dance or unicycle down the street whilst juggling flaming swords (although that would be a useful skill to have…), but having the skills and knowledge necessary to cope with the expanding role of procurement in organisations.

In some sections of the procurement profession, authors and business leaders believe that procurement is ‘doomed’, with procurement struggling to attract the right, talented individuals into the profession, while simultaneously limiting itself by not developing the right skill sets to deal with the changing role.

On the other side, some business leaders believe that the next generation is key and that, with a bit of effort, procurement can turn this around and attract the key talent it requires. By using social media, CPOs can understand how to stay ahead of the game and attract good procurement professionals, while strides can also be made by investing time and effort at university level students.

The Bad News

Spend Matters Editor, Jason Busch, argues that procurement skill sets are not changing with the times, or at least not changing as quickly as the skill sets in other parts of the organisation. A further argument is that the people who you have in procurement now, are not necessarily the people you need to take the profession that next step.

It has been widely quoted that 70 per cent of companies in the UK feel they have a shortage of skilled staff. The story is the same across the world, with similar results being posted in Australia and North America.

CPOs are expecting and demanding more from their teams, but have concerns that individuals are missing the crucial skills required for success. Among the ‘missing’ skills are some biggies too:

· Negotiation

· Stakeholder Engagement

· Strategic Thinking

· Adopting of Technological Enablers

However, for some, the issue is being able to combine all the basic procurement skills with subject matter expertise, something that is becoming less common in an age where the workforce is more mobile and less likely to stay in one place for an extended period of time.

What’s the Problem?

For a while now, associations such as CIPS and ISM, and organisations like Procurious, have been trying to change the perception of procurement as a career. However, old attitudes and perceptions are proving hard to shift.

The next generation coming through education now are looking at procurement and not seeing the potential for advancement and a perceived limited career path is dulling the attraction. It’s only recently that procurement or supply chain heads are taking up executive positions at major organisations in the public eye (think Tim Cook at Apple).

Financial compensation at the top level of the profession is also not keeping with pace with other functions. While CFOcompensation has gone up by double digits on average each year, in some cases CPOs have been lucky to see a 3% to 4% increase.

The Good News

If that all sounds pretty bleak, there is light at the end of the tunnel. In the first 6 months of 2015, organisations have been making very public efforts to attract new talent and showcase procurement.

The UK Government has launched a new public sector procurement apprenticeship scheme, highlighting the experience to be gained working on high profile, high-value projects that affect millions of people. You can find out more about the scheme here.

Other organisations, like NHS Procurement and Skills Development Scotland, are actively working with universities, realising that by recruiting these fresh minds, they are also accessing a valuable source of innovation, new strategic viewpoints and thought processes.

How to Do It

There’s no sure-fire way of attracting the ‘right’ talent to your organisation as different people always look for different things. But we’ve pulled together some good tips for you to think about:

· What is Procurement? – Define it well, offer prospects, tell the wavering students why this is a great opportunity

· Pass on Skills – Around 60 per cent of procurement uses mentorship; ensure that skills are passed on and not lost

· Professional Development – A big one for the ‘millennial’ generation, but critical for helping to retain talent too

· Interesting Roles – Being able to be mobile, work on different projects and gain experience across the function

· Grow Talent – Make sure you hire the right people. Assess things like cultural fit and personal values

· Social Media – Don’t underestimate the power of social media and learn how it can benefit you

Procurious founder Tania Seary is travelling through Australasia in the next few weeks and will talk about procurement talent. Why not let us know if Tania is visiting your organisations, or contact us if you’d like to get her to come and talk to you.

Meanwhile, here are the big news headlines that should be catching your eye in procurement and supply chain this week.

Key takeaways from George Osbornes’s summer Budget

· The government announced plans for a new apprenticeship levy, which would be paid by all “large employers”. Eddie Tuttle, senior policy and public affairs manager at the CIOB, said: “The government has set itself an ambitious target of delivering 3 million apprenticeships over the next five years – equivalent to 600,000 new apprenticeships a year. The introduction of a new apprenticeship levy is a big ask for business, but one that recognises the acute skills shortages industries such as construction will face in the future unless significant investment is made in training. And if the government is to deliver on its ambitions, more needs to be done to promote construction as a viable career path.

· An increase in the national minimum wage, now branded the “National Living Wage” that will rise to £9 by 2020, should help some low paid workers. Iain McIlwee, chief executive of the British Woodworking Federation, says: “And looking at the direct impact on SMEs in the construction supply chain, while an increase in the minimum wage for the lowest paid is welcome, we cannot ignore the fact that such increases have a knock-on effect throughout a business, creating inflation in a firm’s total wage bill.“Our latest State of Trade survey among Britain’s joinery manufacturing firms already reveals that 73 per cent of respondents had seen a sharp increase in labour costs, and this is fast becoming a constraint on business.

· The government is inviting bids for a new round of Enterprise Zones, which will encourage towns and districts to work with local enterprise partnerships to develop bids.

· And finally: Public sector pay will increase by 1 per cent a year for four years from 2016-17.

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Public and Project Procurement for Beginners and Aspiring Procurement Practitioners

Published on 5:53 AM By Procurement Professionals Of Somalia- PPS

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Public and Project Procurement for Beginners and Aspiring Procurement Practitioners

Pre-Bid Meetings: What, Why, Who, When, Where, How?

What are pre-bid meetings?

Pre-bid meetings are gatherings scheduled after an invitation for bids or request for proposals is advertised. They are called pre-bid meetings because they are pertinent to procurement of goods, non-consultant services and works. When they are scheduled for consulting services, they are called pre-proposal meetings. These meetings, also called conferences, are scheduled during the preparation of the solicitation documents (invitation for bids or request for proposals) and the date, time and venue are mentioned in these documents so that all prospective bidders and consultants can become aware of them.

What is the purpose of pre-bid meetings?

The objective of pre-bid meetings is to explain the details of the solicitation documents to interested bidders. Prospective bidders are permitted to request clarifications on the invitation for bids or request for proposals by a stipulated date, and the pre-bid meeting is held within that period.

Why are pre-bid meetings held?

When preparing solicitation documents, especially the terms of reference, technical specifications and scope of work, it’s important to determine if there is need for a pre-bid meeting. The complexity of these documents should be taken into consideration and a decision made in consultation with the departments involved in contributing to the preparation of the solicitation documents.

Pre-bid meetings are held to clarify the technical and procurement aspects of the solicitation documents. They are arranged for more complex procurements in order to discuss the technical and procurement requirements with prospective bidders, listen to their concerns, and take them into consideration in order to improve the solicitation documents. The intent is to give bidders sufficient information to help them submit a bid or proposal that responds to the requirement.

Who conducts pre-bid meetings?

Pre-bid meetings are organized and held by the procuring entity at a venue agreed together with the requesting entity. The procuring entity, with the participation of the technical team that contributed to the preparation of the terms of reference or technical specifications and scope of work, prepares the agenda for this meeting. While attendance should not be mandatory, prospective bidders should be encouraged to attend.

When are pre-bid meetings held?

Pre-bid meetings should be held one week or more after the initial announcement of the invitation for bids or request for proposals. The reason for this is to allow prospective bidders enough time to get, read and study the solicitation documents, and prepare a request for clarification, if any.

It is also better to hold the pre-bid and respond to request for clarifications about two weeks before the bid or proposal submission date. This is to allow the procuring entity to prepare and send responses to bidders request for clarification after concluding the pre-bid meeting, and give bidders enough time to take the responses into consideration when preparing their bids or proposals.

Where are pre-bid meetings held?

The venue of the pre-bid meeting should be easily accessible to the target market. It could be a rented venue or a government provided facility. Although bidders will assume the cost of attending a pre-bid meeting, effort must be made to keep the cost as low as possible because it is logical to assume all cost incurred by bidders will be reflected in the bids or proposals submitted. So holding the pre-bid nearest to where target bidders are located would help to reduce the overall cost of the bidding process

How are pre-bid meeting conducted?

An agenda should be prepared to arrange how the pre-bid meeting will be carried out. An indicative pre-bid meeting schedule follows:

· Opening remarks and introduction

· Presentation on the procurement aspect of the requirement

· Questions and answers on the procurement aspects

· Presentation on the technical aspects of the requirement

· Question and answers on the technical aspects

· Closing remarks

A representative of the procuring entity should be present and should discuss the entire solicitation document. A summary of each sections should be given and bidders allowed to ask questions.

The technical aspect of the requirement should also be discussed, giving bidders the technical details of the requirement, and they should be allowed to ask questions.

Questions and answers could also be left until the end of both the procurement and the technical presentation.

There should also be someone at the pre-bid in charge of capturing all questions and answers so they can be put into the minutes of the pre-bid meeting, which is sent to all bidders that attended and those that requested or obtained the solicitation documents. Although it may not be possible to answer all questions raised at the pre-bid meeting, a written response addressing all questions, must be sent to all bidders by the date stipulated in the solicitation documents.

BY JORGE LYNCH

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IS A LACK OF COLLABORATION TO BLAME FOR PROCUREMENT PERCEPTION GAP?

Published on 5:43 AM By Procurement Professionals Of Somalia- PPS

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iS A LACK OF COLLABORATION TO BLAME FOR PROCUREMENT PERCEPTION GAP?

Is a lack of collaboration between procurement and critical business functions to blame for squandering budgets of UK businesses?

Procurement’s true value is held back by restrictive corporate cost saving edicts according to new research published today.

The ‘Procurement Perceptions’ study was carried out by Redshift on behalf of Wax Digital. It took into account the views of 200 procurement, finance, IT and sales & marketing department decision makers in medium to large UK organisations.

The main brunt of the report aims to address the scale of rule breakers using risky suppliers and spending without necessarily seeking permission from decision-makers.

Daniel Ball, Director, Wax Digital, says: “Business functions are not working effectively and closely with procurement experts to source the right suppliers, strategically manage their spending and ensure they are following compliant purchasing processes. This suggests a high level of maverick spending behaviour which can lead to poor value for money, cash flow issues and contract risk.

Daniel continues: “Procurement wants to control and influence departments’ supplier choices and spending, however, many of these other departments are pushing back, seeking more supplier and spending freedom and believing that procurement just gets in the way.”

The comments are backed-up by figures that reveal 24 per cent of procurement respondents said that supplier selection was a joint decision with the department in question. This is in stark contrast to the 8 per cent in IT, 6 per cent and 2 per cent in sales and marketing.

Procurement perception gaps

The study found that part of the problem lies in the perception of procurement amongst other departments. Procurement is typically viewed as being more administrative than strategic, while in reality the balance lies somewhere in the middle. In Wax Digital’s research Just 15 per cent of other department respondents saw procurement as mainly or wholly strategic but 46 per cent saw procurement as mainly or wholly administrative.

Other findings include: 54 per cent of procurement respondents say departments follow a formal tender process, compared to 24 per cent in sales and marketing.

36 per cent of procurement say they shortlist suppliers on behalf of these departments against their business requirements, but only 12 per cent in IT agree.

In conclusion Daniel offers a few recommendations: “This research indicates that there is still some distance to go by procurement, or a need for improved communication, before other critical departments understand the benefits of procurement, stop breaking the rules and close the perception gap.”

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WHY SUPPLY CHAIN RISK SHOULD BE ON YOUR CORPORATE AGENDA

Published on 5:41 AM By Procurement Professionals Of Somalia- PPS

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WHY SUPPLY CHAIN RISK SHOULD BE ON YOUR CORPORATE AGENDA

Over the past decades the world has experienced several major natural and manmade disasters. Events such as the 2010 Eyjafjallajökull eruptions in Iceland and the 2011 Tōhoku earthquake and resulting tsunami in Japan have a profound impact on companies operating in the same country or even on the other side of the world.

The increased complexity and global nature of modern supply chains has the direct effect of reducing visibility of suppliers across the supply chain. Few organisations are aware of the full risks that second and third tier suppliers pose (Jüttner, 2005; Manuj and Mentzer, 2008), whilst a survey by the Business Continuity Institute found that more than 40 per cent of reported supply chain disruptions originate with second- and third-tier suppliers (Business Continuity Institute, 2013).

Supply chains are subject to a wide range of risks on both domestic and international level. Increased complexity of supply chains makes it more difficult to assess the likelihood and impact of disruptions, thereby potentially increasing the risk exposure. In addition to risks resulting from increased supply chain complexity, firms are exposed to operational disruptions due to quality problems, supply variability and capacity constraints. The past decade has also shown an increase in disruptions following natural disasters and terrorist attacks (Sheffi and Rice, 2005).

The direct effect of supply chain risks

Operating in such a connected world with high volatility hampers organisations in fulfilling their primary goal: shareholder value creation. In carrying out its business operations to maximise shareholder wealth a firm is exposed to risks that, once materialised, can have negative operational consequences and cause disruptions. Kleindorfer et al. (2003) exhibited how supply chain disruptions have a significant detrimental impact on both short and long-term operations and

financial performance. Shareholder value decreases by almost 11 per cent by these disruptions (Hendricks and Singhal, 2003) and organisations that experience disruptions, on average, experience a 40 per cent stock price decline (Hendricks and Singhal, 2005).

Implementing the right strategies

Implementation of a business continuity plan, dual sourcing strategy, and close cooperation between supply chain partners are mentioned as the most used actions in order to reduce exposure of the supply chain to potential disruptions or to mitigate the impact (MIT Forum for Supply Chain Innovation, 2013). There is however an inherent struggle with mitigating supply chain risks in today’s globally linked organisational models. The networks of interrelationships that build up a typical supply chain in its entirety hold exposure to risk. Whilst one link in the chain may bear the direct impact of a disruption, the actions of other members in the chain will have consequences for the entire network.

Research suggests that companies with mature and flexible supply chain and risk management capabilities are more resilient (lower impact and faster recovery) to supply chain disruptions. These companies have a clear focus on proactive (ex-ante) SCRM as opposed to only taking a reactive (ex-post) approach. This in turn leads to better operational and financial performance compared to firms with immature SCRM capabilities (MIT Forum for Supply Chain Innovation, 2013).

Overcoming organisational barriers by strengthening the business case

Even though advances are made, supply chain risk management activities still take up organisational resources in terms of managerial time, increased buffer inventory, etc. The major losses incurred by organisations in the aftermaths of events such as the Iceland volcano eruption and the tsunami that hit Japan, have shown that proactive SCRM is still in its infancy with most organisations. Several leaders have however emerged and shown the distinct value of proactive SCRM, thereby increasing the business case for organisations.

Saenz and Revilla (2013) demonstrate the importance of proactive and reactive strategies in dealing with unexpected disruptions through the example of how Cisco Systems, a communication

technology firm, successfully mitigated the impacts of the 2011 tsunami in Japan almost without a loss in profits, whilst the total economic losses are estimated on at least $217 billion. Having developed their risk mitigation strategies after the difficulty in dealing with the Hurricane Katrina’s aftermath, Cisco was able to evaluate the disruption impact for more than 300 suppliers – from tier 1 to raw material providers, listed more than 7,000 affected parts by number, assigned a risk rating to each part and charted a mitigation response within 12 hours.

Case studies like this help strengthen the business case for implementing (proactive) SCRM strategies. The apparent lack of proactive SCRM strategies adopted by organisations is an area that requires further research in order to convince business leaders of the importance of SCRM (Simangunsong et al., 2012).

Procurement Professionals Of Somalia- PPS

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