Procurement risk can be mitigated with better data

Everyone in the logistics sector knows by now that it's important to have as much solid data as possible, from every aspect of their operations. That is, of course, easier said than done, and it takes buy-in from a large number of people and organizations to pull off properly. Getting across the importance of that kind of buy-in isn't always easy, but there's one aspect of such efforts that should be an easy selling point: It reduces procurement risk.

Risk in the supply chain arises in a number of ways, but mitigating that risk often requires one simple solution, according to Supply Chain Dive. When more companies have a clear picture of what their suppliers are doing at any given time, they are dramatically less likely to face that kind of risk and continue to operate as expected. That problem has become particularly pronounced during the novel coronavirus pandemic, obviously, and tying supplier problems to the lack of complete, clear data should be an easy A-to-B connection for supply chain professionals.

The right data will go a long way for your organization.

This kind of effort requires not just further financial investment in things that help drive data creation and collection, but also strategies for how that data will be monitored and used, the report said. The more organization leaders and decision makers can do to create a holistic approach, the better off all involved are likely to be.

How do you do it?
Of course, even if you know what data you might need to reduce risk, experts note that it's not just a simple flip of a switch that enables you to actually collect it, according to PYMNTS. Not only might it take the effort to understand your own needs and working with existing suppliers to meet those needs, but it might also require a pivot to new partners as needed, especially if persistent efforts to get long-standing partners onboard just aren't working.

The fact is if partners aren't working with you toward these goals, there's nothing that says you need to stick by them, the report said. Instead, seek to work with companies that actively share your goals and vision.

"All procurement levers like cost, supply assurance, risk, flexibility or speed to market can be optimized either separately or as a balanced mix based on business requirements, only when actionable supplier data is credible, complete and a click away," Valekumar Krishnan, vice president at procurement intelligence company Beroe, told the site.

Getting it right
You can never afford to have a set-it-and-forget-it approach when it comes to data collection and risk assessment, according to Spend Matters. Instead, you have to make this an ongoing process that always looks to determine the weaknesses and strengths of all involved, then try to reduce the former and lean into the latter. That work will go a long way toward ensuring you have significant success.