Recently I posted a poll on the frequency with which supplier performance audits should be conducted from a Procurement Risk Mitigation perspective. The options were three, six and nine months. The overwhelming majority of participants voted for the six-monthly option, which of course is the recommended audit interval.
However, on groups that were specifically orientated to my geographical area (South Africa), the results were predictably cautious with most participants voting for the three-month option. This concurs with my own practice and consulting advice given to clients.
What is the justification for such a shortened period between performance audits?
Beyond the obvious reasons of ensuring compliance, controlling cost and quality, building and managing long term partnerships etc, several other and seldom mentioned but vital contributing broad- based motivations exist from a uniquely local perspective, or from any buyer’s perspective, who operates in a volatile environment
- Is it a local or foreign based supplier?
- Is it a local official agent or does the foreign supplier run distribution locally?
- Quality of Initial Procurement/Supplier Risk audit conducted on the supplier and how regularly updated is it?
- Marketplace Grapevine feedback and how does it influence ongoing Procurement Risk Intelligence.
- BEE considerations and ramifications (RSA specifically)
- Long firm scams in various guises.
- National and Global economic uncertainties
- Political uncertainties
- Targeted Supplier Development Programme Risks
- Optimising Risk Mitigation over the long term.
In the final analysis it, all boils down to the environment you operate in, and the unique factors that influence doing business in that environment.
Karl Furrutter is a Strategic Procurement and Liquidity specialist active in the consulting, specialised projects and interim management arenas. Karl has thirty years of cross industry experience within Strategic Procurement and Capital Recovery who is focused on developing bespoke strategical solutions tailored to each customer’s unique requirements.
Contact Karl on karlf@furrutterandassociates.co.za or visit Furrutter & Associates at www.Furrutterandassociates.co.za