How to Overcome Procurement Risks Resulting From a Pandemic?

Supply reliability and risks are always a major challenge in the procurement process. The major risks to be considered include market risks, potential frauds, cost, quality, and delivery or fulfillment. In addition to these common risks, there are also compliance risks like anti-corruption and policy adherence.

One of the most important, and often overlooked, sources of potential value within the procurement function is risk mitigation. The inflow of goods and services, and the complex supply chain that produces them, carry a hefty amount of risk. These factors include:

• Compliance, including adhering to ethical norms, regulations, internal guidelines, and industry codes
• Supplier contracts and fraud such as thief invoice fraud
• Sourcing risks like product quality, cost, vendor compliance issues, delivery, and tracking

All these risks can have a significant impact on the bottom line and building competitive advantages. They are best managed with centralized, efficient, and transparent data along with strong supply chain management systems.

The three key principles to overcoming these risks and ensuring the success of procurement are: to remain in compliance with laws and social rules, commit to business ethics, and ensure competitive supply.

As businesses are entering the digital era where those who are reluctant to change will likely fall behind, digital transformation has become a necessity in the procurement process. Supply, sourcing, and compliance risks are best managed with the use of centralized, efficient, and transparent data as well as having digitized supply chain management systems to support the business.

The re-engineering of human resources roles and focus of roles within the supply chain has shifted towards sourcing and buying through online channels during the pandemic. Moving forward, we can expect this to be the standard approach to the procurement models ahead.

Taking DKSH as an example, we started digitizing the procurement processes five years ago by developing an in-house e-Procurement platform to manage procurement activities for our markets in the Indochina region. This platform also allows suppliers to bid online in real-time, increase collaboration, and monitor vendor and procurement performances.

The system helped to reduce paperwork, replaced print documentation, shortened the purchasing lead time, and centralized the key processes. As all transactions are carried out and monitored digitally, this increases transparency and allows better audit trails.