Procurement

Risk
Management

• Yo u r C o m p a n y N a m e
 Conclusion &

Content
Recommendations

Basic Approach to Mitigating the Supplier Risk

Risk Management and protecting Supply Chain

Integrated Challenges to establishing a Risk

View of Risk Management Program

Supplier Risk
Risk Events Management Process

Benefits of opting for Risk Procurement Risk

Management Services Management Program Steps

2
Basic Approach to Risk Management

Identify areas of Risk Identify Critical Risk Risk Mitigation

Strategic Disruption in upstream suppliers Risk avoidance

Compliance Geo-political risks Risk reduction

Financial Commodity risks Risk sharing

Operational Currency risks

Corrupt practices

Force majeure

Bankruptcy

Legal issues

Environmental issues

Labour issues

Risk management should be a continuous & evolving process that addresses all the risks associated with the organization’s past, present & future activities.

Some global companies have developed in-house risk management departments establishing specific objectives pertaining to their organization & have aligned the risk management initiative
to meet the organization’s business goals.

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Integrated View of Risk

As an integrated view of risk takes root in more businesses, executives are thinking more broadly about the risks their company faces. Many of the most
significant ones are driven by relationships with other entities, such as service providers, alliances and joint ventures

Internal Ecosystem

FCPA, anti – bribery

Text here
Text here

Other third parties

Outsourcing providers
Contract (hourly)
Supplier risk events

Suppliers & sub-suppliers

Joint ventures
An Integrated
View of Risk

Alliances
External market events

Internal organizational events

Technology – related events

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 Supplier Risk Events

Supplier inability to Rapid degradation of
obtain trade finance supplier performance
▪ Cost
▪ Service
▪ Response time
Supplier inability to support Unacceptable Supplier
new product/service Practices
introductions
▪ Violations of immigration law
▪ Sweatshop conditions
▪ Unsustainable environmental
waste
▪ Tax evasion
Failure of an outsourcing
strategy
▪ Unmet expectations on costs
▪ Customer satisfaction
▪ Productivity
▪ Quality

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Benefits of opting for Risk Management Services
Greater lead time in the event of a risk materializing

▪ Central platform for all the information

▪ Minimize downtime & increase preparedness in the event of a disaster
▪ Monitor the effectiveness of the program
▪ Understand future risk

Reduced Cost
▪ Eliminates training cost – by managing risk with ready – trained skills & proficient personnel
▪ Readily available information – risk management firms have access to experts who are spread across
the numerous industries & who provide their expertise real-time
▪ Risk management tools – developing in house or acquiring external tools for monitoring risk effectively

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Procurement Risk Management Program Steps

Step 1 Establishing the overall goals of the program

Gathering the data needed to manage the process (e.g., supplier spend levels, performance
Step 2 data, price & cost trends, demand forecasts, upcoming contractual milestones).

Step 3 Monitoring the supply base for problem & opportunities.

Step 4 Creating mitigation plants for the types of events that might leave the company exposed.

Step 5 Prioritizing risk mitigation efforts by segmenting supply categories by complexity & importunate.

Step 6 Identifying potential risk events by supply category.

Step 7 Measuring overall risk exposure level, taking into account the maturity of the market, complexity of the solution, etc.

Assigning a monetary value to the potential impact of each risk event (e.g., margin at risk, cost of
Step 8 lost productivity, cost of schedule changes.

Step 9 Refining the plan through consideration of the impact of knows events

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 Identification Critical Risk Business Continuous
Categories & Suppliers Evaluation Continuity Plans Monitoring

Risk Management Process

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Overview of the Process

Identification of critical
Continuous monitoring categories & suppliers
▪ Real time or periodic monitoring of ▪ Financial impact
suppliers, category & other supply ▪ Supply dependencies
chain entities ▪ Source of competitive advantage

Beroe
Risk Management

Business continuity plans Risk evaluation

▪ Supply chain mapping & risk analysis
▪ Alternate sourcing locations
▪ Supplier risk analysis
▪ Alternate supplier identification
▪ Disruption monitoring

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Identification Critical Categories & Suppliers

High
Supplier
criticality
criteria Medium critical categories Highly critical categories
Commodity high profitability impact High profitability impact unique product

Profitability Impact
substitutes available many specs critical technology limited supply
equivalent suppliers base difficult to substitute

Highly
Critical
suppliers

Medium critical Low critical categories Medium critical categories

suppliers Commodity substitutes available Unique product specs limited supply
many equivalent suppliers limited base difficult to substitute limited
profitability impact profitability impact

Low critical
suppliers Low

Total Supply Base Supply Complexity

Low High

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Risk Evaluation

Risk Evaluation Key Outputs

Supply chain mapping & assessment of following parameters

across all the tiers

Supply & price risk of downstream raw materials Key risks in the supply chain

Risk from alternate demand segments Critical lower tier suppliers

Supply chain mapping & Geographic dependency risks Critical lower tier materials
risk analysis
Your text here Critical sourcing locations

Your text here Critical logistics hub

Your text here Key risks faced by the supplier

Financial & qualitative risk score with the supplier categorized into low, medium or high
Historical supply disruptions & impact
risk bucket

Risk management practices with respect to raw material price volatility, interest rate
Your text here
fluctuations, currency rate fluctuations etc
Supplier risk analysis
Adherence to quality standards Your text here

Your text here Your text here

Your text here Your text here

Disruption monitoring Monitoring of suppliers & supply chain entities Real-time or periodic alerts on disruption or supply market developments

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Business Continuity Plans

Following the risk evolution phase, business continuity plans can be created based on the risk profile of supplier for
mitigating risks. The business continuity plans cover alternate sourcing locations & suppliers based on the requirement
of the business. Some of the criteria used fir shortlisting alternate suppliers or sourcing locations are listed below

Alternate sourcing location Alternate supplier identification

▪ Regional production volumes ▪ Availability of grade/service level

▪ Net exports volumes ▪ Available capacities
▪ Business environment ▪ Comparative risk
▪ Macro-economic scenario ▪ Your text here
▪ Your text here ▪ Your text here
▪ Your text here

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Continuous Monitoring

Monitoring
Supply chain entities

Critical suppliers

Critical low-tier suppliers

Critical logistic hubs

It involves real-time or periodic tracking of the critical

supply chain entities for developments. This in addition to
improving the visibility also enable the companies to
Critical sourcing locations
reduce the ‘Time to Respond’ & ‘Time to Recover’ in
case of any supply disruption. It would also help in
building intelligence on supply markets
Critical supply market developments

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Challenges to establishing a Risk Management Program

Critical challenge Major challenge

100%
90% 5%
30% 26% 22% 19% 12%
80%
70%
60%
50%
40% 25%
85% 65% 55% 45% 35%
30%
20%
10%
0%

Procurement is held
responsible for supply risk
but lacks a mandate or
resources to address the
issues
Procurement mostly
reacts to risk to ensure
regulatory compliance
rather than get ahead of
the problem
Procurement struggles to
fund the supply risk
“insurance policy” versus
other “hard-dollar
ROI”projects
Supply risk is too big a
responsibility with too
many stakeholders & risk
factors to manage well
Procurement has not Procurement does
had major issues yet, & not have an explicit
until there is a supplier risk measure
significant event, will as part of supplier
not invest seriously scorecard

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 Mitigating the Supplier Risk
and Projecting Supply Chain
Certify Integrate risk mitigation and dependency into the sourcing process
Choosing a supplier has inherent risk. A strong sourcing process mitigates that risk, and
incorporating risk into your current metrics can help ensure that suppliers coming into your
organization can meet business requirements and will be able to successfully deliver their
product or service

Monitor Identify the suppliers that have the most impact on your business
Not all suppliers are of equal value in your supply chain. Stratify them into categories that
make sense for your business

Enrich internal data with third-party information to increase visibility

Analyze and create actionable intelligence
Technology in today's marketplace combines the data automatically to reduce the amount
of time and resources required to manually analyze and create reports

Mitigate Develop disaster recovery plans in the event of supplier failure

One cannot predict supplier failure with 100 percent certainty. But one can protect your
business by planning for it. Proactively prepare for these potentially damaging supplier
disruptions by having alternative source strategies in place. Develop supplier contingency
plans by documenting competitive suppliers and continually researching for new suppliers

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Conclusion & Recommendations
Identify and leverage the
burning platform
This helps obtain support from the
business for the new or revised
process, whether it’s safety,
security or some type of business-
continuity platform
Use supply intelligence and
scenario planning
These tools identify the universe of
potential supply-risk events (including
both frequency and severity. Formally
document the findings and, more
important, ensure that key stakeholders
understand and accept the findings
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Identify potential risk
mitigation and contingency
steps required
This will help avoid or at least
minimize the frequency and severity
of the risks. Know the risk position
and associated costs by developing
options with associated timelines,
resourcing & costs
Measure and monitor the
changes and benefits from the
new process
Make sure to document successes and
use them to continue the momentum.
Again, make sure that the measurement
systems are updated in order to keep risk
management top-of mind
16
Procurement Risk Management Icon Slide

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Charts & graphs
19
 Area Chart

Product 01
100 This graph/chart is linked to excel, and changes
automatically based on data. Just left click on it and
90 select “Edit Data”.
Sales In Percentage(%)

80
Product 02
70 This graph/chart is linked to excel, and changes
automatically based on data. Just left click on it and
60 select “Edit Data”.

50

40

30

20

10

0
FY '13 FY '14 FY '15 FY '16 FY '17 FY '18 FY '19

This graph/chart is linked to excel, and changes automatically based on data. Just left click on it and select “Edit Data”. 20
Column Chart

10

Product 01 8

Expenditure In ($ Billions)
This graph/chart is linked to excel, and
changes automatically based on data. Just left
click on it and select “Edit Data”. 6
6

4
4
3.5
3
Product 02 2.5
This graph/chart is linked to excel, and
changes automatically based on data. Just left 2 2
click on it and select “Edit Data”. 1.5
1

0
2011 2012 2013 2014 2015 2016 1017 2018 2019

Years

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Additional Slides

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Our Mission
Vision
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About Us

Target Audiences Valued Clients Preferred by Many

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Our Team

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 Our Goal
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Financial

50% 70% 90%

Minimum Medium Maximum
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Idea Generation
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Puzzle

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Venn

02 04

01 03

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Timeline

2016 2017 2018 2019

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Swot

S W
Strengths Weaknesses
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Magnifying Glass

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 Quotes
Opportunity is missed by
most people because it
dresses in overalls and
looks like work.
... Thomas Edison

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Comparison

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 Mind Map
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