Procurement Risk Identification and Control Process-World Credit Organization
5.1 Procurement risk identification and control process
5.1.1 Procurement risk identification and preventive measures table
Category of sources of risk |
Subjective will |
number |
Risk Description |
Precautions |
External risk (W) |
Risk of subjective dishonesty (Z) |
WZ1 |
The customer signed the contract with a false identity, and then defrauded the advance payment |
Check the authenticity of the customer's identity and honesty. The specific measures are: require customers to become members of the World Credit Organization [WCO] and check their credit files. |
WZ2 |
Customers deliberately pass off inferior products as superior products |
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WZ3 |
The customer's price is dishonest, unfair, and far higher than the normal or average price. |
In the contract, agree on the most favorable price clause. That is: under the same conditions, the price is not higher than the lowest price in the same industry. |
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Objective Risk of Distrust (K) |
WK1 |
The customer management system is unscientific or the technology is not advanced, resulting in unqualified product quality |
Review the customer's supply capacity. Specific measures: require customers to provide ISO quality management system certificate or related product certification |
|
WK2 |
A major crisis such as a customer's financial crisis or a customer's bankruptcy leads to a sudden outage of product supply |
Review customers' financial risks. The specific measures are: require customers to provide credit rating reports issued by ICE8000 credit agencies. |
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WK3 |
Objectively, the contract is in dispute, but the loss is caused by insufficient legal protection |
Add CS clause or/and arbitration clause to the contract, and use ICE8000 dispute resolution mechanism to handle disputes |
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Internal Risk (N) |
Risk of subjective dishonesty (Z) |
NZ1 |
Procurement risks caused by malicious collusion between employees and customers or procurement risks caused by insufficient sense of responsibility of employees |
Require the staff of credit management department, supply department, and financial department to become members of the World Credit Organization [WCO], and formulate reward and punishment measures. If possible, try to use bidding to purchase goods< /p> |
NZ2 |
Procurement risks caused by insufficient working ability of employees |
Requires purchasing personnel to have professional knowledge of purchasing items |
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Objective Risk of Distrust (K) |
NK1 |
The risk of out-of-control procurement caused by the lack of or too simple procurement system |
Establish a procurement management system |
|
NK2 |
The risk of inefficiency caused by overly complicated procurement system |
Evaluate and update the procurement management system |
5.1.2 (for external risks) procurement risk control flow chart
5.1.3 (for internal risks) procurement risk control process
The above content is excerpted from "Building an Integrity Unit - ICE8000 Integrity Management" (written by Fang Bangjian, free to use, but please indicate the source)