Common procurement risks and how to mitigate them

Procurement is one of the most vital aspects of a business, serving the goal of obtaining goods and services for an organization at a cost-effective rate. It is widely agreed in the business world that procurement must be reliable and secure. In order to maintain this high standard of security, the mitigation of risks is crucial.

 

Procurement risk management is intended to anticipate risks and safeguard businesses from any problems that can arise during the procurement process. Each purchase brings with it a set of critical factors: product quality, vendor reliability, customer satisfaction, company reputation and more. All of these should be monitored to avoid all types of procurement risks.

 

Having an effective procurement risk management strategy will save costs for your business and help avoid any unwanted setbacks. It will ensure that your business’s procurement process remains efficient and productive.

 

What does procurement really mean today?

 

In the modern business world, procurement has evolved from being a simple cost-cutting process to being an integral strategy designed to advance an organization’s bottom line. As businesses continue to adapt in the midst of a global pandemic, risk management in procurement has even stronger implications for the future success and reputation of a business.

 

Majdi Sleimen, co-founder of Tradogram, describes how the importance of procurement now extends to every part of an organization. “The rapid transformation of the procurement function from the back office to the boardroom has proved that procurement objectives are far beyond just cost control. Procurement plays a vital role in strategically aligning company values while managing the supply chain. Now more than ever, companies are turning to procurement to mitigate supply chain risk and maintain business continuity.”

 

Common types of procurement risks