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Articles in category: Risk Management
Supply chain disruption, natural catastrophes, and fires or explosions are the risks that global insurance companies are most concerned about in the coming year.
The Allianz Risk Barometer 2014 found that 43 per cent of corporate insurance experts are worried about business interruption and supply chain risk. This is down slightly from last year’s 46 per cent. Natural catastrophes (storms, floods, earthquakes) are second on the business risks list.
Due to the complexity and inter-dependencies of these megatrends and the diversity of affected countries, markets and companies it’s difficult to assess the impact on procurement but leading procurement managers foresee major changes in a couple of focal areas within the next decade.(Read Full Article)
Supply chain management has been in the news lately, and not in a favorable way. Recently, Hitachi Consulting revealed that supply chains are not a major concern for many top executives who responded to its survey, a fact that is jarring to say the least, and hopefully not indicative of management sentiment generally.
Then, there were all the reports of the horrific Bangladesh factory collapse that killed 1,100 garment workers. Those reports included one about a clothing manufacturer who claimed no responsibility for the victims. Yes, the company is part of a consortium funding safety upgrades to Bangladesh factories ...(Read Full Article)
In an unusual move, the eThekwini Municipality intends to extend its contract with a liquidated company that has been operating the city’s parking meter system. This is according to papers before the Durban High Court in an application for extended powers brought by liquidators Johannes Muller and Hussan Goga, who are handling the affairs of Emtateni Logistics.
Judge Gregory Kruger granted an order which extends the liquidators’ powers and enables them to continue the contract with the city.(Read Full Article)
A methodology for properly classifying information risk is the first rule of designing an effective supplier assurance programme. It may sound obvious but in practice not many organisations do it. Fewer still do it well. But unless your programme is based on a clear understanding of the value of the information you have stored, along with your regulatory obligations, it is very easy to end up with a one-size-fits-all approach that treats every supplier the same.(Read Full Article)
Purchasers must monitor their suppliers and build strong relationships if they want to avoid risks in procurement.
That’s the message from Jaguar Land Rover’s director of purchasing Ian Harnett, who was speaking at the ‘Resilience, sustainability, integrity and emerging trends – managing supply risk in the 21st century’ event. Harnett explained that the company looks at risk management on a regular basis because it demonstrates “certain things that you cannot ignore”. He explained that as the company has grown significantly over the past years........
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Stephen Easton, partner at A.T. Kearney, told the ProcureCon conference in Amsterdam unknown unknowns were by their nature difficult to predict but they included how laws are going to change in future, what regulations could be introduced, how global terms of trade might alter and natural disasters.
Known knowns included whether a supplier has filled in a compliance report and known unknowns included whether a supplier was complying with the law, Easton said.(Read Full Article)
It's possible to insure against most things these days, but cyber security insurance is a relatively new field and findings by NSS Labs show that it's becoming more popular. The report rounds up a number of recent surveys which put cyber insurance adoption at around one third of large US businesses.(Read Full Article)
Yet another MTN executive, head of procurement Edwin Mashilo, has been "pushed out" and will leave at the end of this month. Mr Mashilo’s departure was announced to staff on Friday. He becomes the sixth senior executive to leave the telecommunications giant in the past five months.
The list includes chief financial officer Nazir Patel, head of mergers and acquisitions and international business development Khumo Shuenyane, and group executive for business risk management and member of the tender committee Ignatius Sehoole. Another recent departure was that of Fatima Laher, while chief corporate services officer Robert Madzonga is on special ...(Read Full Article)
Today, supply chain risk is recognised as a major threat to business continuity. A break in the supply chain can reduce a company’s revenue, cut into market share, inflate costs, or threaten production and distribution. FM Global has identified three steps that organisations can take to reduce their supply chain risk: Identifying critical suppliers is the first step towards understanding your exposure to supply chain risk.(Read Full Article)
Today's dramatically changing business environment highlights the strategic importance of procurement. Until recently, procurement was a necessary, but seldom celebrated, component. But now-a-days, procurement function is playing a pivotal role in the organization's success as supplies of critical commodities have tightened and prices have risen. Procurement is now undergoing transformation as a function in itself. Age old, traditional and rudimentary concepts have shifted towards a more open, innovative and flexible focus. Expectations have also undergone a change. Companies are looking for procurement related services not just to fulfill their requirements at the lowest cost but also to enable ...(Read Full Article)
After tsunamis, protests, wildfires, and riots — to name just a few recent major disruptions — few managers can be unaware of companies' vulnerability to the vagaries of politics and extreme weather. You'd think. Yet three quarters of the 195 large companies surveyed recently by APQC got hit by an unexpected major supply chain disruption in the last 24 months. We are talking here about an unforeseen event involving a physical asset owned by the enterprise or a third party. Major means an event that has the potential to severely interrupt a business' ability to deliver on its promises to customers ...(Read Full Article)
CEO Ashley Almanza is to conduct a thorough review of the security business following a year that has seen it suffer financial and reputational damage as a result of contract problems. Almanza, who replaced previous chief executive Nick Buckles in May, announced the review days after the world’s largest security company was accused of over-charging the Ministry of Justice (MoJ) on an electronic tagging contract. In addition to this issue, the review will also look at the company's failure to deliver the contracted number of security guards for the London 2012 Olympics, which cost the company £88 million ...(Read Full Article)
Contract compliance is the ability of an organisation to insure purchase order detail accurately reflects the terms and conditions as are found in the contract detail of long term agreements (LTA’s). The reasons for entering into LTA’s with suppliers are many. LTA’s are often used for securing supply of a scarce resource from a supplier. LTA’s are also used to group a large number of common items (Commodity/Category) together to obtain purchasing leverage and thereby obtain preferential pricing over the term of the contract. LTA also facilitate closer and more stable relationships within the supply ...(Read Full Article)
As natural disasters play havoc with supply chains, procurement professionals need to know what a robust risk management process should look like. The name Eyjafjallajökull might not exactly trip off the tongue, but it is one that has been on everyone’s lips for the past few years. It is, of course, the Icelandic volcano that erupted in 2010, causing all sorts of logistical problems for both goods and people. It also alerted the whole of Europe to the issue of supply chain risk, when previously this had tended to be the preserve of risk managers and supply chain ...(Read Full Article)
Risk mitigation strategies lie at the heart of corporate governance. What is the contribution to these mitigation strategies from the procurement and supply chain management function? It is rare to find robust methodologies in place that will, in a structured way, identify the potential risks that exists in contracts with third parties. A failure to manage the risks leaves the organisation vulnerable to reputational damage, disputes, threats to service performance and diminishing profit margins. Contractual risk is one such key area. There are organisations who have not reviewed their contractual terms and conditions for many years. There are others who ...(Read Full Article)
Think about it. You create a document on your laptop – it’s got performance results, strategic positioning statements and an analysis of the biggest risks to your operation and you email it to the senior management. Now there are a dozen copies of that document on as many laptops. Your colleagues have their company email synced to smartphones and tablets and within moments those sensitive documents are replicated dozens of times on as many devices. Those individuals concerned with losing data will back it up to memory sticks. Before you know it, the data you spent millions on protecting has ...(Read Full Article)
Nine years ago, AMR Research began compiling an annual list of what it considers the top supply chains in the world, and that study continues to this day. Companies are ranked based on five criteria: Gartner analysts opinion, peer opinion, three-year weighted return on assets, inventory turns, and three-year weighted revenue growth. Johnson & Johnson, though plagued by a number of headache-inducing supply chain/customer service disasters in recent years, excels in coordinating procurement.(Read Full Article)
Collaboration is the solution for just about every aspect of supply-chain management except one: cybersecurity. Then it becomes the problem. The very nature of global supply chains demands that companies exchange sensitive information with multiple partners, some of them several tiers removed from the manufacturer. Their ability to protect data can be highly variable. Internet thieves and predators are looking to take advantage of the slightest weakness. The Information Security Forum puts it best. “Sharing information with suppliers is essential.....
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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