With the run up in product recalls and food concerns last year, product quality and supply risk management have captured the attention of the C-suite and the general public. Supply managers have an opportunity to leverage this crisis to boost their brand in the organization and help their companies turn the strategic balancing of cost, performance, and risk into a competitive advantage. Yet most buyers struggle with where to start and how to secure support across the organization.

Kris Colby, Senior Manager of Ariba’s Spend Management Services group, recently authored a white paper on the subject – An Ounce of Prevention: Steps Your Organization Can Take Now to Reduce the Risk of a Product Safety Incident. I have coerced Kris into summarizing his recommendations in the post below.

Product recalls and safety scares have seemed to reach epidemic proportions lately. And just like any epidemic illness, there are only three ways to deal with it: Prevention, Diagnosis and Treatment

Not surprisingly, the cost and effort involved with each step of a recall increases as you move further across the scale. Full-scale recalls are infinitely more expensive than any steps you can take ahead of time to prevent them. Therefore, prevention is key.

Just as with an illness, there are pro-active steps that your organization can take now to reduce your exposure to supply chain risks.

Good “Prevention” practices can be broken down into four components:

• Sourcing process improvements - By carefully evaluating and selecting suppliers and setting clear and enforceable expectations about performance you can reduce your company’s exposure.
• Supplier site visits - As important as a strong sourcing process is, it does not replace the need for supplier site visits. We do not mean here the “Meet and Greet” where the supplier rolls out the red carpet for your exec’s and has everyone on their best behavior. Instead, these site visits need to be structured properly to capture consistent, valuable information about both current and prospective suppliers.
• Product testing and reporting - Product testing is routine practice at most organizations and is sure to increase given all the recent headlines.
• Supplier Performance Management and scorecarding - A structured supplier grading system will make it easier to drive continuous improvement via consistent and objective measurement as well as provide a single repository for all the information.

No matter how robust the processes and systems you put in place, you will never completely eliminate risk, but by combining these four dimensions of supplier management, your organization will be able to reduce your risk.

Above all, you will have taken every step possible to protect your brand and your customers’ trust.

Sage advice Kris. I encourage Supply Excellence readers to download a complimentary copy of the full report here. I look forward to hearing more from Kris and other Spend Management Services group experts in coming posts.

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