Procurement Risk Identification and Control Process-World Credit Organization

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ICE8000 credit knowledge column
  • 1. "Introduction to ICE8000 Credit Knowledge"
  • 2. "Building an Integrity Unit——ICE8000 Integrity Management"
  • 3. "ICE8000 Credit Investigation, Analysis, Rating"

    • 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

    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.

    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.

    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

    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

    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

    Procurement Risk Control Flow Chart External Risk

    5.1.3 (for internal risks) procurement risk control process

    Procurement risk control process internal risk

    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)