In partnership with APICS, the Association for Operations Management, Protiviti recently conducted a focused and extensive study of procurement contracting and related contract management practices and risks. The conclusion is that a large proportion of organizations need to improve the management of their procurement contract risks and opportunities. The report provides recommendations.
The graph below is showing in which areas Procurement-contract risk management is the most unsatisfactory, 1) from a general perspective and 2) focused on indirect procurement:
You can download the study for free but after registration, here: Procurement Contract Risk Management: An extensive and revealing study of procurement contract management practices, risks and controls
My take on Protiviti is here:
http://blog.sourcinginnovation.com/2007/02/28/protiviti-manage-risk-reap-reward.aspx
Thanks Michael for the reminder. Your post definitly adds excellent insights about Protiviti.
We are purchasing rig on progress billing basis. What protection can we get to ensure that in case of loss or damage, the manufacturer would able to deliver the goods. Could we require them to have an insurance against loss or damage while the rig is being built. In this regard , what type of insurance will that be? Thank you. I hope I can get the reply ASAP.
Hi Mary Ann,
Your question is quite specific to me. Of course, you can require your rig manufacturer to subscribe an insurance against loss or damage (…), you can also call for a penalty in case of rig procurement disruption, but most of all you should identify how the best to avoid those disruptions, which might be critical and costly for your business.
I would recommend you to read those following articles:
– http://www.esourcingwiki.com/index.php/Supply_Risk_Management (THE ‘Supply risk management’ wiki)
– http://www.ogc.gov.uk/documents/Risk.pdf (how to define a risk management framework)
– http://www.scmr.com/article/CA6457963.html (how to avoid the risk management pittfalls
– (Procurement Risk Management at HP)