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Published by Supply Knowledge

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Published by: Supply Knowledge on Oct 28, 2013
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ew topics today generate more interest or are more impor-tant to procurement teams than supply chain risk. Supplychains are increasingly more global and unforeseen eventsthat disrupt delivery and affect the bottom line can tax eventhe best prepared procurement teams.To ensure that your supply chain can meet the rigorousdemands of your organization, OfficeMax Workplace and MyPurchasing Center have partnered to bring you the latestinformation on managing supply chain risk. Together, we havecompiled some of the best articles on the topic at MyPur-chasingCenter.com in a new guide.With the guide, Procurement Takes Lead in Managing Sup-ply Chain Risk, procurement teams will better understandinherent risk in relationships with suppliers and learn howto measure and track risk. There’s a scorecard that will helpprocurement teams figure out if the activities they have inplace to manage risk are world-class or behind the class anda list of tips to evaluate a supplier’s financial risk. Finally, MyPurchasing Center sits down with Larry Hartley, Senior VicePresident, Supply Chain, at OfficeMax Workplace, to discusshow the supplier assures its products and services and helpscustomers manage their risk.
Procurement Takes Lead in Managing Supply Chain Risk 
By John Campi
oday, we find ourselves with an interesting conundrum; inthis time of uncertainty with potential tax changes and fur-ther developing regulatory activity, corporations are hoardingcash and are reluctant to invest. Moreover, there is a continu-ing need to improve processes and strengthen our supplynetworks in order to become more profitable. Concurrently,risk within the supply network is arguably at an all-time highand appears to be increasing every year. So how do we pro-ceed in these times of high risk and uncertainty? The answerlies within the fundamentals of business conduct.To improve certainty of supply and drive improved margins,corporations today need to reduce the inherent risk withinthe supply network and improve operational performance. Inorder to achieve these improvements, it is imperative that thefundamentals of supplier engagement be reviewed and modi-fied to reflect a new reality.For the past few decades, global sourcing activity has beena primary driver by which many companies have sought tolower their competitive cost structure. The capability of under-standing the supply network has become increasingly com-plex with this global expansion of the supply base. While com-panies once knew their suppliers on a reasonably intimatebasis, today’s supply networks have become layers of supplythat challenge even the most stringent effort to understandand view all elements in the network. This loss of visibility hascreated a higher risk environment and jeopardizes continuityof supply for any business.In order to survive and thrive in this complex environment,companies need to rethink their supply engagement prac-tices. It is no longer acceptable to think that a financial reviewof a ‘tier-one’ supplier is sufficient protection against poten-tial supply interruption. Today’s expanding supplier networkrequires a significant change in approach to identify the risk,tools and metrics needed to monitor, measure and assessthe supply base.Companies need to have an exceptionally well-defined cat-egory strategy that understands the value/risk propositionthat exists within each group of suppliers. The greater thevalue/risk equation the greater the need for a collaborativeapproach within the supply chain. The classic approach ofconfrontation practiced by many procurement organizations isno longer viable. Supply networks must be engaged as a col-laboration of partners with common understanding of strate-gies in order to better understand the risks that are inherentin the supplier’s supply chain. This requires, not only a newstrategy for engagement, but quite possibly new skill sets forthe procurement organization.Genesis has recently conducteda surveywhich has proventhe need for these changes and we have initiated researchto better understand the new reality of procurement in ourglobal economy. Well over half of all business disruptionsemanate from the supply chain, yet companies have failed toadequately address this issue in a systemic way.Our research has found that: There are illusions as to the
Survival Conundrum: Understanding Inherent Risk in the ChangingEnvironment of Supplier Engagement 

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