PROCUREMENT & PREQUALIFICATION SUPPORT
The role of procurement and prequalification can vary widely across organisations. This can complicated through transnational transactions and multi-jurisdiction supply chains. The role of procurement can be focused on price only with standard documents through to sophisticated and dynamic purchasing solutions.
Outsourced Procurement Solutions
Prequalifying Suppliers is an important part of maintaining a proper risk management system. Our solution streamlines your Supplier Prequalification in a process that combines services and technology. Purchasing can be split between four core functions:
- Price
- Probity
- Compliance
- Risk management
Many organisations are well equipped to make price decisions with general capacity to manage probity. Generally, there is limited resources and capacity to assess supplier systems for how well they will ensure compliance with legal requirements and the effectiveness of the supplier systems to meet the supply requirements.
Risk, Reputation, Compliance, Standards
The effectiveness of the supplier’s systems to manage risk is fundamental to the customer’s business continuity and to their operations in times of disasters or emergencies. Typical customer supply chain risk includes the non-supply (or delay) attributable to:
- Health issues
- Food Health issues
- Safety issues
- Logistics issues
- Environment issues
- Not meeting legal requirements
Assessing and monitoring the Supplier’s systems, processes and controls are proactive steps to ensure integrity of the supply chain.
Other elements can include consideration of reputational issues through:
- Entity Background research (media, social media, etc)
- Key personnel research (media, social media, etc)
- Government registers
Lastly considerations about compliance and standards will assist, if there is an incident about the ability to recover. This includes:
- Insurance
- Registrations
- Certificates
- Certifications
Working with Customers
Based on the risk assessment, we establish with our clients a customised profile to engage prospective and current suppliers covering the risk, reputational and compliance/insurance elements.
We then develop and deliver the assessment and monitoring program to support that assessment.
Working with Suppliers
Based on customer requirements we can make our solutions available at:
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– Making the customer procurement process efficient through screening out suppliers who would be ineligible or inappropriate |
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– Establishing complementary assessment for agreed elements for Risk, Reputation, Compliance, Standards |
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– Establishing elements for improvement by suppliers |
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– Assessing supplier readiness for Risk, Reputation, Compliance, Standards |
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– Monitoring and reviewing supplier readiness for Risk, Reputation, Compliance, Standards |
Reactive Procurement Solutions
Many legal documents insert a range of reactive strategies that purport to deal with risk and events. Unfortunately these strategies have limited effect when monetary compensation will not be sufficient, including damage to reputation/brand or where criminal prosecutions have been launched or fines levied against individuals. In the case of a significant event the counter party is unlkley to be solvent or the insurer unwilling to pay.
Reactive strategies embedded in legal documents include:
- “comply with law” – unhelpful when the counter party has not complied wit the law and not complied with the contract and has not told the client
- “insurance” – may or may not respond to the event, depending on wording, exclusions, actions of the insured. The insurance may also not be relevant to the loss suffered ( ie: reputational damage)
- “release and indemnity” – may or may not respond depending on where the assets are and the insurance
Obtaining “proof” or “assertions” of compliance have limited effect and given how they can be negated, provide little comfort to the Board and Senior Managers, that the risks are being adequately managed.
When coupled with “price only” decisions on suppliers, the likelihood increases that an incident will happen or additional resources will be required to manage the contract. Either way the “true” cost of the contract will be higher than the fees nominated for payment under the agreement.
Outsourced Procurement Solutions
In some areas there are “third party certification” systems in place. In many cases these are just upgraded “comply with law” commitments. In most cases arrangements include:
- “independent audit” assertions – in numerous instances this is not correct, as the auditors or pool of auditors can provide other services to the nominated party. They also “certify” over multiple years and so have an “ongoing” relationship that is not truly independent.
- “one audit fits all” assumptions – the items covered by the audit may not be particular to the client requirements or align with the client’s requirements
- “in favour of the client” work – the audit is for the Supplier and will be limited. In that situation the audit is a statement that the Supplier system works for the supplier. It is not a statement that the Supplier solution works for the Client
- “recovery from the auditor” for damages – will not apply given the commentary above, the limits on auditor’s insurance policy and the limited fiscal resources of the auditor to compensate the Client.
Proactive Solutions
COR Assure brings procurement into the solution to ensure that across the supply chain the most effective and efficient service is obtained that reduces the exposure of the Client and ensure a strong and adaptive supply chain. COR Assure’s Procurement Management Support Tool, works with procurement,commercial and operational areas to support:
- business continuity
- pre-emptive actions to improve confidence in the supply chain
- strategies to reduce non-conformances and improve performance