Supplier Risk Management - Moving from Crises to Risk Management

A methodically supported, process-coordinated, systematic and standardized approach.

Successful risk management in procurement requires constant monitoring of procurement risks, regular reassessment of critical suppliers, control and reporting mechanisms to manage supplier risk across functions, divisions and regions. We support you with our process-oriented and systematic methods to ensure crisis-driven reaction to a risk-oriented active action in procurement.

Risikomanagementprozess

You can find a detailed description of our approach to implementing risk management in procurement here:

1. RISK IDENTIFICATION
RISIKOIDENTIFIKATION

The challenge in the risk identification phase lies in the non-transparent risk suppliers and their mutual dependencies on each other. Suppliers with a small purchasing volume should not be regarded as uncritical per se. It is often these very small suppliers that trigger supply bottlenecks that can quickly lead to a production stoppage. If, in addition, the supplier base contains several thousand business partners, this makes the identification of critical suppliers even more difficult. The involvement of the respective specialist departments is absolutely essential to ensure that critical suppliers are identified in their entirety.

We solve exactly these problems with our methodology for identifying your critical suppliers and analyze your complete supplier base.

The material-induced supply risk analysis identifies the suppliers that supply your company with production-relevant supply-critical materials. After these have been subjected to a supplier dependency analysis, you will have a precise overview of your critical suppliers.

2. RISK ANALYSIS
RISIKOANALYSE

Every industry, every market and every company faces a wide variety of risks. Therefore, an effective risk analysis must always be adapted to the respective company and aligned accordingly to the market conditions and company-specific circumstances.

For this purpose, we provide you with a catalog of possible risk indicators. We advise you on which of these risk indicators to embed in your risk scorecard in order to analyze the default probability of your critical suppliers. This will give you a full picture of your current risk situation in procurement!

To also increase your ability to react to emerging risks, an alert functionality is also implemented. In this way, you can react quickly to crises.

3. RISK MANAGEMENT
RISIKOBEHERRSCHUNG

The most important phase of risk management is supplier-based risk control. Often, the implementation of measures fails due to the lack of internal support from interface partners such as quality assurance, logistics, development, product development or finance.  As a result, there is a lack of replacement suppliers for highly critical and risky suppliers. If the qualification of new suppliers sometimes takes several months, a risk event can massively affect the value chain and have a considerable impact on a company's balance sheet.

The analyses previously performed avoid this situation. Building on the transparency created and a detailed risk analysis on a supplier basis, we prioritize the highly critical as well as high-risk suppliers and derive appropriate standard strategies, on the basis of which the corresponding measures are then defined. The practicability and feasibility of the concept enables smart communication to the affected interfaces. Clearly defined responsibilities and measures worked out in detail will help your company to implement a risk-oriented design of the supplier base.

If required, we also look forward to supporting you in the implementation of measures for highly critical and risky suppliers.

4. RISK CONTROLLING
RISIKOCONTROLLING

Effective risk management is not a static task or linear process. It requires constant monitoring, regular reassessment, and control and reporting mechanisms to manage supplier risk across functions, divisions, and regions.

Therefore, we advise on establishing the right KPIs to monitor your risk situation and implement control and reporting mechanisms. Another component of this phase includes KPI-based measurement of the impact of measures in order to also demonstrate the success of the decisions made.

The precise process representation ensures independent continuation and regular re-evaluation on an annual basis.