Print

Outsourcing/Strategic Purchasing

Outsourcing and strategic purchasing are an important component of supply chain management. However, while the costs and benefits of different outsourcing options can be calculated, the risks associated with these options can be harder to quantify – but they are nonetheless real and potentially significant. Outsourcing critical components, services, etc. does not equate to outsourcing risks; rather the risk landscape is shifted and needs to be re-evaluated.

Global Risk Experts can help identify the potential risks associated with outsourcing decisions involving the selection of:

Contract Manufacturing Organisations (CMO) – e.g., finished or semi-finished goods as result of outsourcing.

Critical Components Suppliers (CCS) – e.g., providers of products, product components, machine/installation parts, etc.

Critical Service Providers (CSP) – e.g., logistics, transport, warehousing and similar services.

Scope:

For these evaluations, the scope for each unit investigated typically includes:

  • Risk assessments of relevant practices, systems and equipment/installation for environmental protection, health, safety and security (EHSS).
  • Possible business critical liabilities.
  • Assessments of external risks (natural hazards, neighbourhood, social unrest, etc.).
  • Evaluation of the preparedness to handle expected and unexpected events.
  • Compliance with EHSS, labour laws and ethical standards (including special expectations of clients).

Deliverables:

The deliverables typically include a comprehensive reports containing: 

  • Comparative classification of the evaluated units according to magnitude and nature of their major business/reputational risks.
  • Concise management summaries for each unit and comparisons against other relevant operations.
  • Graphic grading of essential aspects for each unit.
  • Structured conclusions.
  • Preference ranking for selection (with graphs and explanations)
  • Recommendations on the adequacy (Y/N/Conditional) of potential partnerships.
  • Recommendations on tackling performance gaps for ‘conditional’ units

Global Risk Experts can also provide ongoing surveillance / audits of contract partners.