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The Visibility Gap - Addressing Risk Management in the Procurement Workflow
Process.pdf

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The Visibility Gap:
Addressing Risk
Management in the
Procurement
Workflow Process
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TABLE OF CONTENTS
The Visibility Gap: Addressing Risk Management in
the Procurement Workflow Process
Chapter I. The Procurement Workflow Process in
Detail: A Step-by-Step Breakdown
Chapter II. The Procurement Workflow: A Realm of
Hidden Risks
Chapter III. Bridging the Visibility Gap: Strategies for
Effective Risk Management
Chapter IV. Future Trends in Risk Management for
Procurement Workflows: Embracing Innovation
Conclusion: Illuminating Your Procurement Future
Identifying Hidden Risks: We'll unveil the
potential dangers at each stage and how
they can impact your business.
Introduction:
Shedding Light on ‘Visibility Gaps’
Chapter 1:
Understanding Your Procurement
Workflow: We'll explore every stage of the
process, from placing orders to receiving
payments.
By the end of this eBook, you'll be
empowered to transform your
procurement process from a potential risk
factor into a powerful engine of efficiency
and cost savings. Let's get started on
making your procurement process shine!
Imagine the procurement process as a giant
machine. It keeps your business running by
getting what you need, like materials and
services. But there's a hidden problem – you
can't see everything happening inside this
machine. You might not see all the potential
problems lurking ahead, like a car with a
dirty windshield. These "blind spots" can be
costly, leading to delays, wasted resources,
and fraud.
This eBook is your guide to illuminating risk
management within your procurement
process. We'll break down this eBook into
various chapters, from ordering supplies to
paying invoices, and show you the hidden
dangers to watch out for. We'll also equip
you with powerful strategies to avoid these
risks and keep your procurement running
smoothly.
Here's a sneak peek at what you'll learn:
Chapter 2:
Chapter 3:
Strategies for Success: We'll equip you
with actionable tactics to proactively
manage risks and achieve a more efficient
procurement process.
Chapter 4:
Strategies for Success: We'll equip you
with actionable tactics to proactively
manage risks and achieve a more efficient
procurement process.
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Your detailed procurement process workflow is the backbone of your organization,
ensuring a steady flow of essential goods and services. However, to manage risk
effectively,
we need to understand the intricacies of each stage within this process.
Let's delve into a detailed breakdown of the typical procurement workflow:
Needs Identification & Requisition:
The Spark: This stage begins when a department identifies a need for a
particular good
or service. They initiate a requisition, a formal document outlining the
required items,
quantities, and desired delivery timeframe.
Hidden Risks: Inaccurate specifications within the requisition can lead to
procuring
unsuitable goods, resulting in wasted resources and project delays.
Additionally,
unauthorized purchases outside the established procurement process can bypass
crucial approval checks.
Supplier Selection & Sourcing:
Finding the Right Fit: The procurement team identifies and evaluates potential
suppliers
who can meet the outlined needs. They consider factors like pricing, quality,
reliability,
and past performance.
Potential Dangers: Vendor fraud can pose a significant risk, jeopardizing
financial
security. Overreliance on a single source can also be problematic, leaving you
vulnerable to disruptions if that supplier experiences issues. Weak contract
negotiation
can result in unfavorable terms for your organization.
Purchase Order Issuance & Order Management:
Formalizing the Agreement: A formal purchase order (PO) is issued once a
supplier is
chosen. This document details the agreed-upon terms, including items,
quantities,
pricing, delivery dates, and payment terms.
Room for Error: Inaccurate information in the PO can lead to incorrect
deliveries, delays,
and additional costs. Inefficient order management can also result in missed
deadlines
or unclear supplier communication.
1
The Procurement Workflow Process in
Detail: A Step-by-Step Breakdown
CHAPTER 1
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3
02
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5
Visualizing the Flow:
To further enhance your understanding, refer to the accompanying infographic
that
illustrates the procurement workflow process and provides a clear picture of
each stage
and its role within the overall process.
Goods/Services Receipt & Inspection:
Verification & Quality Control: Upon receiving the ordered goods or services, a
thorough
inspection is conducted to ensure they comply with the specifications outlined
in the
PO. This stage ensures quality and prevents potential issues further down the
line.
Hidden Threats: Damaged goods upon arrival can lead to production stoppages and
customer dissatisfaction. Incomplete deliveries can disrupt operations and delay
projects. Non-conformance with quality standards can compromise the final
product or
service.
Invoice Processing & Payment:
Settling the Bill: Once the goods or services are received and approved, the
supplier
submits an invoice for payment. The procurement team reviews the invoice for
accuracy
and ensures it aligns with the PO details.
Financial Risks: Duplicate invoices can lead to overpayments and financial
losses.
Fraudulent charges can also pose a threat. Delayed payments to legitimate
vendors can
damage supplier relationships and impact future deliveries.
By understanding the intricacies of each stage, you'll be better equipped to
identify and
mitigate potential risks within your procurement workflow process. In the next
section, we'll
delve deeper into these hidden risks and their potential consequences for your
organization.
Resource
wastage
Procurement of
unsuitable goods
Project delays
Unauthorized
purchases
Needs
Identification &
Requisition
Supplier
Selection and
Sourcing
Purchase Order
Issuance and
Order
Management
Goods/Services
Receipt &
Inspection
Invoice
Processing &
Payment
Vendor fraud
Over-reliance on
a single vendor
Weak contract
negotiation
Incorrect
deliveries
Unexpected
delays
Additional costs
Missed deadlines
Unclear
communication
with suppliers
Production
stoppage
Customer
dissatisfaction
Project and
operational delays
Non-conformance
with quality
standards
Invoice
duplication
Fraudulent
charges
Payment delays
Visibility Risk Gaps Across Procurement Workflow Process
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The Visibility Gap - Addressing Risk Management in the Procurement Workflow
Process.pdf




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