Procurement: Reducing Risk in the Supply Chain

However, if we were to take this metaphorical stew and make a reduction of it to its purest form, it would likely focus on one area: reduction of risk.

With the cookery-based metaphors out of the way, the area of risk is open to interpretation. Is it financial risk? Risk to quality? Risk to safety, or reputation? The short answer is all of the above.

Local authorities in particular want to be reassured that your services are risk free, allowing them to be confident in your abilities and certain that they are making the correct decision when awarding a contract.

One of the main contributors to risk is control, or more specifically, the lack of it. If you can manage every aspect of your service, you can reduce the likelihood of issues with quality, efficiency, cost, and sustainability. However, there are some occasions when your scope for control is more restricted, such as in your supply chain. According to research from the Tungsten Network, 84% of businesses have suffered supplier failure over the last three years. Needless to say, this can swiftly become an area of concern for local authorities.

How to reduce risk in your supply chain

Ideally you want the best balance of quality, price and quantity, but not to the detriment of sustainability. Conducting risk assessments on each supplier ahead of formal partnership will allow you to identify any areas of concern that can be a red flag, such as financial stability.

Service level agreements should be comprehensive and in specific detail, promoting clarity, and providing a systematic procedure for performance management of your supply chain. Potential discrepancies can then be identified and analysed, ensuring the business relationship remains mutually beneficial.

Regular reviews are essential; initial assessments are like passing a driving test – they only provide an isolated example of competency. Ongoing reviews at regular intervals will help to identify emerging concerns and enabling you to respond accordingly.

Development of a supply chain continuity plan, and acquisition of multiple suppliers, will ensure you have an agreed procedure to accommodate any potential supply chain failure, minimising damage to your reputation and impact on your end clients.

Bidding for contracts

These methods are a drop in the ocean in terms of reducing supply chain risk, but will certainly help to develop confidence in your sustainability. However it is certainly a topic to keep in the forefront of your mind when bidding for a contract; you might know you’re risk free, but you aren’t scoring your own submission and you need to ensure that this is portrayed effectively.

It is now up to you to demonstrate how effective your methods are, how they can eliminate risk, and, crucially, why you are better than your competitors. The public sector is especially risk averse, and the contracting authority will be looking for a low-risk option when deciding on a supplier – ensure that it is you! Examples of your previous experience, capabilities to undertake the work, and case studies are a great way to demonstrate that you are the right company for the job.

Within Executive Compass, we cater for all sectors, and are experts in taking the ingredients provided by clients and developing distinctive and persuasive bids that convey the essence of your business, leaving risk-averse authorities satisfied by your response, and tempted by your proposals. Contact us today to discuss how we can help with your SQ or tender submission.