Procurement is critical for the smooth running of an organisation. Procurement enables an organisation to acquire the vital resources necessary for production, operations and business continuity. As with other organisational activities, the risk of fraud is inherent in the process of purchasing supplies and disposing of what is considered surplus to requirement.
Along with these risks, procurement managers ought to devise strategies for mitigating risks before they turn disastrous for their organisation. With the advent of e-procurement or purchase over the internet, the risks have only intensified. In the article, read about the most prevalent risks to purchasing and how managers can lessen their effects on their organisation.
Poor Internal System
For procurement to be flawless and fraud-proof, there needs to be a clear and watertight internal system. The system entails transparent lines of command, a network of checks and balance, as well as a clearly outlined audit process. Lack of, or weakness, in the above measures, creates room for fraudulent activities.
To mitigate this risk, organisations need to come up with clear procurement channels and a centralised procurement system. Having an independent auditor also helps in evaluating compliance with the laid down procedure of purchasing.
Cyber Security Risk
With much procurement moving from physical to virtual, the risks posed by cyber attackers is real. Bidding information stored in organisational databases could be accessed by hackers who then use the details to distort the procurement in favour of some bidders. Moreover, hackers could scuttle the whole procurement process leading to delayed purchases and stalled operations.
To reduce the risk of cyber-attacks on procurement processes, organisations ought to invest in hacker-proof e-procurement systems. Just like the online casino Unibet, which has invested in a great online system to make it safe to place your bets. in Having back up data for bids is also a great strategy of throwing the hackers off track. Investing in genuine security software and firewalls will also keep hackers at bay.
Conflict of Interest
A conflict of interest between suppliers and procurement managers poses a real danger to purchasing. Where conflicts exist, the likelihood of getting a raw deal cannot be ignored. Genuine procurement endeavours to purchase the right items at the right price and time. With conflict of interest, this can hardly be achieved.
Procurement managers should desist from engaging in underhand deals with suppliers. Potential conflict should be declared. Moreover, procurement processes should be subjected to multiple level decision making rather than a single person or office.