As the global economy continues adjusting to current conditions, corporate executives have focused additional resources on making their companies more efficient, streamlining operations and lowering risk to the bottom line. These priorities have become even more critical to the supply chain.
In the current economic environment, the need for managing supplier risk is becoming increasingly important for supplier management executives. Weekly headlines highlight the importance of monitoring supplier risk.
It's no secret that today's business environment is permeated by constant pressure to contain costs while minimizing risks. And yet, embedded in this cautious, penny-wise climate is a particularly glaring contradiction: supplier payment missteps are now more commonplace than ever before.
Supplier risk is greater than it has been in decades. The current economic conditions, combined with an increasingly complex global business and regulatory environment, has created an atmosphere where most firms are feeling more vulnerable to uncertainty in their supply chains.
Risk management practices, techniques and tools have been used extensively across all industries over the last 30 years. Risks with respect to a company's supply chain, and in particular both their direct and indirect suppliers, have become operational concerns from the front lines to the boardroom.
"With Aravo, Boston University suppliers now register online and must choose BU standard payment terms of N60 or enroll in the University's accelerated payment program. This initiative has improved the University's working capital position on a one time basis by an estimated $16M on a supply base of $325M."
Richard Stack, Director of Sourcing & Procurement, Boston University