Procure IQ

Last week on SpendMatters, William Busch covered the shutdown at a Canadian Ford Motors factory that was caused by labor unrest at an auto parts supplier facility in India. I provided my views in the Comments, but wanted to share them here as well, since Supply Excellence readers may also have some insights on the topic.

Unfortunately for Ford, this case caught them off guard and demonstrates how tricky risk management can be. You never really know where an impactful disruption might occur. However there are structured ways of being prepared.

Firstly one has to be aware of all the different kinds of risk that might hit you; disruption, financial, reputational or even major disasters like a tsunami. Probably nobody has the resource to cover every possible risk. During my time as global head of procurement, we developed a risk segmentation prioritized by profit at risk. This way one can deploy moderate resources and protect the business where it matters most.

In such an approach, one cannot stress enough how important it is to have solid, up-to-date supplier information. So, supply risk management and information based supplier management are two sides of one coin. You should not attempt one without the other. Fortunately today there are information providers and systems available to help with these tasks. However, this can only help if you get your spend management house in order and know exactly how much you spend for what.

In the past many have shied away from what can appear a daunting task that could potentially devour all of your valuable resources. With structure, good base data and possibly some external help, one can manage comfortably. This appears infinitely better than having to explain why 5,000 cars could not be built and huge sales are being lost.

Uwe G. Schulte’s LinkedIn Profile.