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Articles in category: Risk Management
Current commodity risk management practice has flaws, something we uncovered having published a comprehensive report on commodity risk management in Europe. Limited understanding of risk: A startling discovery is that only 50% of all companies are quantifying their risk exposure, leaving every second company in the dark about where, in their commodity spend, the risk lies. Far too many companies rely on ambiguous assumptions about volatility, but fail to properly identify how price developments of various categories relate to each other.(Read Full Article)
In April this year, Toyota, Honda and Nissan had to recall 3 million vehicles after it was found that the inflator used in the front passenger air-bag did not work properly. The part had been purchased from Japanese supplier Takata. Having used the same supplier, BMW said in the wake of this that it would look at the parts used in its own cars and has now decided to initiate a recall. Speaking to Bloomberg, Bernhard Santer, a spokesman for the carmaker said that the cars in question are BMW 3-Series models produced between December 2001 to March 2003 and ...(Read Full Article)
The brewer undertook the integration of a new solution following the launch of a strategic initiative to reduce supply cost volatility caused by price fluctuations in commodities such as barley, wheat, maize, diesel fuel, natural gas, bunker fuel, and aluminium. The solution, developed by Triple Point Technology, Commodity XL Strategic Planning and Procurement (SPP), was selected by the brewer, the company has stated, because of its ability to provide real-time scenario analysis to reduce commodity price risk, decrease overall commodity expenditure and because it can be integrated with SAP financial, logistics, inventory, and invoicing solutions.(Read Full Article)
To fulfil its transformation agenda, State-owned transport and logistics group Transnet has appointed local black-owned accountancy firm SekelelaXabiso to lead its five-year, R2-billion internal audit contract. SekelelaXabiso would be awarded 40% of the work during the first year, while empowered auditing and accounting firm Nkonki Incorporated and “big four” member KPMG would be responsible for 20% and 40% of the work respectively.(Read Full Article)
Oxfam has accused the world’s largest food and beverage companies of being “overly secretive” about their supply chains. As part of its Behind the Brands campaign, the charity rated the organisations on their policies in seven areas: worker rights and conditions; development of farmers who produce ingredients; land management; water use; climate change; how they protect women’s rights; and the transparency of their supply chains, policies and operations.
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Historically deemed a subset of procurement with limited executive support and cross-functional involvement, supplier management has evolved to justify the creation of a standalone, enterprise-wide commercial business discipline.. Large organisations no longer need to be convinced of the importance of investing in supplier management – due mainly to common business sense but also to the multiple cases of material damage resulting from inefficiencies in supplier management such as Boeing’s supplier over-dependence, the European food industry’s ongoing ‘horsegate’ debacle, Lloyds’s 2012 vendor data scandal and sub-tier supplier labour violations impacting multinationals such as Nike, Walmart and Apple.(Read Full Article)
The current sub-contractor controveries surrounding BP's liability for the gulf explosion and Boeing's grounding of its 787 Dreamliner should not obscure an ultimate take-away for corporate leaders: companies must take operational responsibility for ensuring that products and services provided to them by third party suppliers are safe, effective and of high quality. In this era of complex supply chains and the hiring of expert sub-contractors, taking such responsibility is crucial for preventing events with the potential to adversely affect the corporation and its reputation.(Read Full Article)
A survey by consultancy Ernst & Young revealed just 48 per cent of UK firms carry out due diligence on their supply chain, with 30 per cent admitting they had not carried out any checks whatsoever. The survey, which was based on interviews with procurement managers and directors, revealed just 6 per cent of respondents had received notification of unethical activity in their supply chain, while 14 per cent didn’t even know what third party due diligence meant.
Most companies carefully plan their logistical operations to ensure they are cost effective, run smoothly and get products or raw materials where they need to be in a timely fashion. Developing the best strategies is critical - without proper management and optimization, operations can become too expensive or inefficient, resulting in supply chain breakdowns. While a business owner may believe its logistical operations are flawless and will function smoothly no matter what the future holds, executives with this view may need to take a step back and analyze the downfalls(Read Full Article)
of failing to take proper risk management strategies.
An online poll conducted during an Energy Manager Today webinar this week found that the majority of webinar participants only looked at their energy procurement strategy once a year. Karl Van Orsdol, national account manager with DNV KEMA Energy & Sustainability, said, “You can develop and purchase a supply portfolio to meet your load needs, but you must be cognizant of the attendant risks. Electricity is the most volatile commodity in world.” Some of the factors to consider when purchasing a facility’s energy are............................(Read Full Article)
There used to be a stigma associated with making purchases using credit. This invariably affected attitudes towards using a purchasing card or P-card as payment method within organizations as well. Some companies placed so many controls and stringent approval requirements around the usage of P-cards that employees avoided this payment method altogether. Other companies were lax in their P-card policies and ended up in situations where employees placed inappropriately large purchases on their cards.
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Exactly a year ago, in the clinical hall which once housed an infamous women’s prison, South Africa’s Corruption Watch was born. The imposing space was packed to capacity with political heavyweights, anti-apartheid luminaries, journalists and human rights activists who had come to welcome the launch of the first civil society watchdog of its kind in South Africa. The organisation was set up to provide safe, credible reporting mechanisms for the public to share their experiences of corruption and expose perpetrators, specifically those involved in the abuse of public power and resources.(Read Full Article)
Of all the risks CPOs deal with, among the least obvious is personnel. Procurement Leaders recently reported on personnel behavioural risks. Many of those risks are the result of a lack of individual ethics. But, there are other risks directly related to personnel as well. The decisions procurement staffs make - based on their knowledge and experience - on supplier qualifications, the probable direction of commodity prices, the strategy for negotiations, or any of a number of other issues are inherently risky and yet critical to an organization’s success.(Read Full Article)
The world's biggest food company, Swiss-based Nestle, and the world's top beef producer, JBS of Brazil, were on Tuesday the latest in a long list of firms to be caught up in Europe's spiralling horsemeat scandal. Their involvement in the fast-moving drama marked another milestone in a scandal that has seen supermarket chains across Europe pull from their shelves millions of "beef" products that are thought to contain horsemeat.
Risk mitigation is something that is and will almost always be a key priority for a CPO. You only have to look at the last few months to get a sense of why that’s true now, and will only become more important this year. An example: in late October ‘Superstorm Sandy’ devastated the East Coast of the United States and the Caribbean, while there were also concerns about the implications to the global economy if the US fell over the so-called fiscal cliff in late December as well as the on-going fiscal crisis in Europe. These events were troubling ...(Read Full Article)
In many advanced economies, supply chain management is valued as a unique professional discipline. However, this isn’t universally the case. An article produced by Crown Agents, a U.K.-based development firm, recommends that in many developing nations, supply chain management needs to be elevated. “Effective supply chain management plays a critical role in ensuring funds are well used, value for money in the delivery of basic services is achieved, and transparency and accountability is assured,(Read Full Article)
The birthday gift of a private jet presented by a member of Word of Life Bible Church, Warri and chairman of the committee of the procurement of the jet, Kevin Nwachukwu, to Pastor Ayodele Joseph Oritsejafor, the head of the church and the national president of Christian Association of Nigeria, on Saturday, November 10, has generated a lot of controversy. In this interview, Oritsejafor tells the story of how the jet was acquired.(Read Full Article)
To survive and thrive, companies need to rethink their supply engagement practices. It is no longer acceptable to think that a financial review of a ‘tier-one’ supplier is sufficient protection against potential supply interruption.
Today, we find ourselves with an interesting conundrum; in this time of uncertainty with potential tax changes and further developing regulatory activity, corporations are hoarding cash and are reluctant to invest. Moreover, there is a continuing need to improve processes and strengthen our supply networks in order to become more profitable. Concurrently, risk within the supply network is arguably at an all-time high and appears to ...(Read Full Article)
Research by Inoxico, an online credit bureau specialising in risk management solutions, shows that each director of the 20 largest companies in SA sits on 14 other boards, increasing the risk for fraud and noncompliance with governance requirements in the Companies Act, Inoxico CEO André Stürmer said this week. Internal systems and processes to detect potential conflicts of interest were in many cases rudimentary and static.(Read Full Article)
The consultancy Monitor Group has declared bankruptcy and Deloitte has stepped into the mix to buy the assets (including Monitor's entire consulting operation). It's likely the biggest winner -- if there is a winner -- in the bankruptcy will be Deloitte, which will, at least on paper, gain hundreds of highly talented consultants and partners with a particular set of skills and expertise which would be hard to replicate with the same scale and culture (provided the proposed deal closes).
has stepped into...(Read Full Article)
In theory, risk management seems such a simple concept. When discussed in the abstract, it lends itself to all sorts of platitudinal phrases, like “pre-planning,” whatever that means. But when a risk turns into an actual event, the platitudes become imperatives, and how well you and your suppliers planned beforehand and respond can determine the survival of your business. American Airlines’ actions before and during the recent Hurricane Sandy provide a great role model for how exceptional supplier relationship management can turn risk-management theory into practice.(Read Full Article)
A few weeks back, I sat in on a fascinating (and downright scary) presentation at ProcureCon by MacDonnell Ulsch (Don), President & Chief Risk Analyst, ZeroPoint Risk Research, LLC. Don is one of the world's top experts on intellectual property and cyber security.(Read Full Article)
During months of bluster from the supporters of Barack and Mitt, US businesses have been assessing the potential risks and benefits that may arise for them from the presidential election, which takes place November 6. Then, a week ago, a third party named Sandy, which had no supporters, stormed in and grabbed their attention. The so-called superstorm with the deceptively friendly name slammed much of the US east coast, toppling trees, homes, and power lines; flooding communities; and closing ports, rail lines, and some roads.(Read Full Article)
Following several delays, government confirmed on Monday that the framework is now in place for the first 28 wind and solar projects, identified as preferred bidders under South Africa’s Renewable Energy Independent Power Producer Programme (REIPPP) in December 2011, to move to financial closure. The signing of the power purchase, implementation and financial agreements would open the way for the construction of projects representing a collective investment value of around R47-billion and a collective renewables capacity of 1 415 MW.(Read Full Article)