Future in Focus: Promoting Risk Stewardship

A procurement department, seeing an opportunity to reach their cost-reduction goals, switches the source of a sub-assembly to another supplier. This seemed perfectly logical; the quality and specs met the requirements. Unbeknownst to procurement, this supplier was noted for delivery outages due to poor infrastructure and transportation systems in its country. So, while the procurement department hit its financial targets by driving cost out of the supply chain, it may have inadvertently also increased the overall company’s exposure to supply chain risk and undue threat to profitability.