The need for robust Risk Management in Procurement is just the same as it is any other field of commercial activity. That does not mean it has to be a Big Deal or that you need to study for years to become proficient.
At its core, Risk Management is simply gazing into the crystal ball that you keep in the third drawer of your desk (you do, don’t you?) to determine everything that might go wrong and planning actions should the worst happen.
In reality, you look around at the experience that others have had for that particular category and/or supplier and draw on their experience to augment your own skill and judgement.
This is not to belittle or ignore the particular risks, especially those of legal challenge and audit accountability that public sector procurement professionals face in their every tender process. It does require a clear need for specialist knowledge and awareness that the private sector does not suffer.
New Zealand has had more than its fair share of natural disasters in recent years, from the terrible 2011 earthquake in Christchurch to adverse extreme weather. NZ sits atop the Pacific Ring Of Fire, which is akin to a war zone of nature because of constant movement in the tectonic plates. Earthquakes, tsunamis, avalanches, landslides and volcanic eruptions are the norm in that region.
In addition, its geographic location at the tip of the commercial world means the supply chain is more delicate than here in the UK – and that may be something of an understatement. NZ procurers sometimes have to sell themselves to global suppliers in order to obtain goods. That seems a complete role reversal but it’s a fact of life down under.
It certainly moves Risk Management much higher up the ladder of priorities for procurement professionals than for their UK counterparts. However, all it means is that Business As Usual is a more colourful landscape in NZ perhaps. The same assessment and planning takes place, although the mitigating actions in the event of a risk being realised may be different and require greater effort to implement in the worst case scenario. That is because of potentially severe supply chain disruption and supplier disruption.
However, “‘supplier quality and performance is the risk impact that gets the most focus (time, discussion, planning) from procurement teams regardless of whether they are in the private or public sectors” according to a Grant Thornton NZ report. So it’s same old, same old in effect, regardless of where you live and work.