How to effectively manage risk in procurement?
For many, risk-taking in everyday life is normal. Some businesses even look forward to taking a “calculated risk”. However, in procurement, the last thing you want is a risk. That’s why managing risk in procurement is essential.
Procurement teams have been trying to outrun risks since the pandemic began. Many teams have successfully overcome risks with the help of efficient digital procurement software. Having smart procurement software in place means that your processes are streamlined. In a global crisis, organizations with an eProcurement software in place will be in a better position to reconfigure their procurement processes. A good digital strategy means you are well-positioned for supply chain and procurement success.
Let’s take a look at the common risks faced by procurement and the steps to manage and overcome procurement risks.
Some common risks faced by procurement:
Considering risks at every stage of procurement is essential when procuring goods and services for your organization. Keeping this in mind, here are the common risks we can expect.
- Inefficient vendor selection
Selecting a vendor that is the right fit for your organization is crucial. For your operations to run smoothly, you need a stable and reliable vendor for the supply of goods and services.
This is why vendor selection is an important step in your procurement process and should not be taken for granted.
- Unsatisfactory vendor management
It is necessary to have a good business relationship with your vendor who you deal with regularly. Lack of communication and underqualified suppliers are a huge risk to your company.
- Ineffective reporting and non-compliance
Keeping track of everything that happens in the procurement process is considered to be good practice. Primarily because this makes the entire process transparent and less prone to error. The risk of not being transparent is faced by many as it affects the functioning of processes.
- Manual handling of procurement processes
Handling the procurement process manually amplifies the risk in supply chains and purchasing. The more manual intervention in procurement, the processes are more likely to be error-prone.
- Delays in basic procurement activities
Since there is no automation in traditional procurement, it automatically increases the risks associated with supply chains and purchasing. Due to human errors, there are delays in even the basics of procurement like creating a requisition or an order.
What are the steps to manage risks?
Risks arise in any form of processes in business activities. However, there are a few generalized steps to manage risk.
- Identifying and analyzing the risk
- Mitigating the risk after identifying and analyzing
- Setting up steps to avoid future risks and effectively monitoring them
How to manage procurement risks?
When you have started managing risks, it gets easier to get a grip on your procurement processes and recovering from past risks encountered. Here are some ways in which you can manage procurement risks:
- Streamlining the procurement process
- Switching to a digital procurement platform and automating the procurement process
- Focusing on building long-lasting relationships with your suppliers
How can Eyvo help?
Eyvo has been in the eProcurement business for over two decades. With our eBuyerAssist v1.5, you can easily track all your spending, pending approvals, re-order quantities, and dates, all in one place.
With Eyvo’s efficient reporting and analytics, your organization can keep track of every spend that happens in the company and every approval that is done. This helps in smooth audits in your company and will save you precious productive time.
Our digital procurement company is easy to implement and will help you save time and money which you can use for other productive activities. We also have a dedicated supplier portal that takes care of your suppliers and promotes transparency.
Now, create requisitions and orders with ease with the help of efficient approvals in place.
Our new and improved modern dashboard lets you customize what you want to prioritize and which information you want to see first. Our improved design will make eProcurement easy and free-flowing.