What are the Procurement Risks?

Procurement risks can be described as the potential for things to go wrong or not as planned. These events have uncertain outcomes or affect an organization’s ability to achieve its goals. These include events that are already occurring but have not had sufficient time to unfold (referred to as “delayed effects”).


Common procurement risks


Inaccurate analysis of internal needs

It is the most significant risk in your procurement process. If you don’t do it correctly, it can lead to severe consequences. Inaccurate data and forecasting can lead to poor decisions.

You may over or understate what you need later, leaving you with products you can’t sell and unhappy customers when your stock runs out.

Impossible timeframes can impact vendor selection, supplier relationships, and customer satisfaction.

Inadequate Budgeting can lead to a significant overspend or inability to deliver anything.

Unsatisfactory outcomes – It is possible to clarify what you want from a particular procurement project.


Poor contract management standards

Non-compliance can result in fines or penalties

Consumer data can raise concerns about data protection

Your needs going unfulfilled

Projects being delayed


Inadequate supplier selection processes

Poor procurement can lead to brand-damaging consequences. Your supplier selection should be as focused on sustainability as cost. If your suppliers are guilty of human rights violations and irresponsible, what looks like a great deal may not be so great.


Ineffective supply and supply chain management

Failure to do this could result in losing partnerships and your procurement teams having to start the vendor-sourcing process over again. If you rely on multiple upstream suppliers for products, this could impact your overall operations.


Rely on manual processes

Correcting document errors or paying the price if they don’t realize an error-filled contract was signed. Recovering data and paperwork that was lost. Manually filing documentation

It can be done to avoid delays in the approval process.


5 steps for mitigation of procurement risk   


Visualize your supply chains

It can be challenging to stay on top of all the significant risks that could affect your business. It will allow you to better plan and respond to events beyond your control, such as a natural disaster, pandemic, or bad publicity for upstream or downstream suppliers.


Automate wherever possible

Automating as many of your processes as possible will save you time and allow you to spend your time improving supplier relationships and reducing human error. 

ListTrader auto processing can be beneficial to automate trading and free you up to do other things.


A solid vendor sourcing strategy is essential

You can include commercial elements in your sourcing strategy. It would help if you weren’t working with vendors who don’t meet your requirements. ListTrader has the best Trader Network to help you connect with wholesale buyers and sellers to improve your relationships.


For measuring supplier performance, develop metrics

Identify the most critical metrics for procurement teams. Then use your procurement software and other automation tools to measure them. Be sure to balance supply chain sustainability with commercial metrics. With analytic data, you can access all your pricelists and stocklists.


Develop a strategy for managing supply chain risks

It is important to minimize it first in a safe place. These risks should not be the only ones you can control. It would help if you also considered what is beyond your control. You can manage the changes that you can handle. But it would help if you also planned for disruptions caused by those you cannot.