Procurement and Risk – Use Microsoft Excel to create tools to identify and address the risks

After a long gap, I found time today to write in my blog about Procurement Risks.

So, What is risk?

The Random House Unabridged Dictionary defines risk as, “The exposure to the chance of injury or loss; a hazard or dangerous chance.”

In any procurement function there are these elements of risks; the auditors always pick them up!

Why we only realize when auditors questioning the credibility of a procurement transaction? Why we are unable to identify these risks prior to its occurrence?

The answers to these questions are either we never had a mechanism to identify and address the risks or we never had the required tools to address the risks.

I thought to finish this subject by start writing about few of the risks, and I thought I could provide a helicopter view of this subject by writing about few risks and say “That is all folks!”, but once I approached the core of this posting I realized how difficult it is to explain the depth of this subject in one post.

BTW, the procurement risks can be classified under following categories (get ready to scroll and scroll);

Strategic Risks
Process Risks
Information Risks

Supply Chain and Spend Analysis

Hello There,

This time, I thought I should give bit of my thought about how we can use excel in spend analysis.

It might have already discussed in business meetings that sourcing Strategy, Category expertise, negotiation methodology, managing supplier relation and procurement execution are all critical components of a highly effective Supply Chain Management initiative and the beginning of these all process starts with spend analysis, so it is the prime tool.

Spend Analysis should be a hot subject of discussion in any Supply Chain Organization because of the importance it has in a decision making process. Take an example of the hospitality industry; spend analysis plays a prominent role in the procurement function because of the ability a spend analysis report has in helping to understand and to clearly establish expenditure patterns throughout the organization which will eventually enable the Supply Chain practitioners to accurately identify how much ($) is being spent, on what (Goods and Services), with whom (Suppliers), by whom (Business Unit) and how (Method of purchase) on a daily basis.

Also analyzing spends supports the day to day food and beverage costing, or for a monthly menu engineering and event costing, just few of the benefits…

Defining and understanding scope of spend analysis is really become a mighty task these days because of non- availability of cleansed, standardized data.

Besides the above mentioned issue related to quality data there are few more show stoppers the analysts are identified and they are:

1.    Lack of expertise and ability among existing staff to access, organize and analyze spend data for sustainable use.

2.    Lack of consistent approach and source to get the real time spend information from a procurement system.

3.    Failure of Top Management in linking the information and insight gained from spend analysis with the strategy and objectives of their organization

Faced with above said facts, the learning from industries around the globe concludes that, the most successful spend data analysis can be done in a more effective way considering the following:

Supply Chain and Tender Evaluation

Hi There,
My second post, it is all about tender evaluation. Transparency is the backbone of procurement function. Transparency can only be assured when a supply chain professional develops competition among suppliers. Also it is critical that a Supply Chain professional need to prove the stake holders based on what criteria a supplier is selected and what thresholds prompted to award a contract to the supplier and how he / she has selected a supplier.

I am sure this can be handled with the help of high-end procurement or contracting software but again a certain amount of manual interaction and customization is required to make this happen.
Why this all hazels, when you can use Microsoft Excel to do this job. I have attached two screen shots which would give you a better idea on how it looks like and a soft copy can be obtained by sending me request for the template please.

Procurement and Sustainability

Most of us are aware of global environmental issues: subjects such as acid rain, climate change, GLOBAL WARMING, greenhousee gas emission and species extinction are often in the media. What is less well understood is the link between these global problems and our everyday actions. Many people are unaware of how they can both contribute to environmental problems and help to solve them.