Proactive Purchasing Orders for Risk Mitigation

In this issue, it will be the related article which is the ending methods for risk mitigation in the business. Even if anything is happened, the business will prolong at least without harming. Or the splendorous word that always uses is "Business Continuity Management (BCM)".

Try to revise that we, now, are in the midst of many risks, for example, flood, earthquake, strike, close the airport, riot, bombing, storm, airplane falling, IT system disorder, water resource dirty, rubbish problem, pirate, political problem, Tsunami, epidemic, strike parade to close the road, danger of terrorist, set a fire, accidental bombing in factory, thunderbolt, electric black out, communication system disorder, loss the key personnel, toxin leaking, nuclear leaking, world economy slow down, partner stop the business.

The said above example disasters are Natural disaster and Man-made disaster, not only what the disaster is occurred, the damage will be created a lot. Now, all over the World believe that many disasters often come and be stronger. If any business doesn't pay attention for the risk of supply disruption. when the disaster is occurred, the business will get the cause of effect very seriously in treating to solve the problems.

So, in order to get at least a little damage, the proactive working is necessary to be done for the risk avoidance and risk mitigation by planning the work of purchasing and finding in the proactive systematically which is called Procurement Contingency Plan. There are totally 8 means as following:

To set a plan for the work of relation with the supplier rapidly and correctly in order to see whom is more or less important for the company. So, we can make a correct decision to see whom be created the relationship as an alliance or must be as a common. The separation of the relationship in a correct way must be learnt well before by the purchaser on the subject of SRM-Supplier Relationship Management. It is not to be making friend as an alliance with all the common suppliers.

To check for sure that our significant suppliers also do the same plan as us for the prevention of risk mitigation or not. Due to the fact that, if the disaster is happened and our significant suppliers are damaged seriously, the bad effect will cause successively through our company too, because we will have no enough supply to consume. In case of our company has a good plan for prevention and mitigation, but if the customers can do nothing, we certainly can not survive.

To adapt the strategy for finding the new selling sources. Certainly, the purchaser always use the Single source system which means buying from the particular customers because of a good service, knowing each other, fair price, and good quality. But for this era which is not a normal era, because we are living in the midst of risks that are said on the above mentioned. The Natural disaster and Man-made disaster are tended to visit us and be more violent than before. We ought to adapt the methods of thinking and working by checking well to see which way the cat jumps. The method of purchasing from many sources is may be substituted from buying from one place. Each source will be spreaded out to the difference region, otherwise the cause of flood, or earthquake, or fire, is got together.

To estimate the new method of stock keeping. When the passed disasters, such as flood, Tsunami, earthquake, were happened, some supplier could not supply goods for us or supplied for us less than our want. The consideration of  the increasing stocks to be higher than before was necessary. On the other hand,  the thinking to reserve for the case that the disasters were happened, our customers might want less merchandises from us. Then, it might cause an effect to our stock inventories. We should have a great deal of surplus of the inventories. All these things, we shall have a meeting to consult with the management division in order to plan for the future to what and how merchandises and raw materials are tended to get more or less the effect. So that, the new method in adaptation for keeping the stocks is being loosen the weightiness to become light.

To estimate the place where the settlement of each of significant customers whom we need to depend on is established. The settlement place of the customer must be analyzed and estimated for the risk opportunity of the disaster which has more or less. Do not look over about the epidemic and the infectious disease. The buying from the countries where the wages are cheap, it is good for us in the capital mitigation. Each of these countries always has the risk in health and the disobeying against the CRS (Corporate Social Responsibility) which will cause the effect to us too.

To give the law division checking the condition of purchasing that hires us to do about the article concerned in the method of operation when the accident is occurred. Normally, when the accident causes any person who cannot work according to the contract, that person must not respond. Do not forget that, sometimes we may not get the damage directly from the natural flood, but the customers are got the damage by flood, they also cancel all our purchasing orders. For us, we will have the right for asking to cancel the purchasing orders of raw material too. If we do not well indicate this matter, we may respond to buy the raw materials that we order now, but there are no any purchasing order from the customers.

To prepare well for the emergency plan in the matter of human being. When the disaster is occurred, some of our staffs may die or get the accident to be cure or cannot go to work because of the problem of the communication is cut. The in advance consideration must be considered for anybody who can take place for working especially the significant position as "IT System".

To join together with all the divisions. If the disaster occurred, it is necessary to transfer the system and the work of every departments to work outside the company. How can we communicate? Is there any IT system which can help or not? At least, it must be done for a while, 3-4 months, before turning to the common situation.

For all the said above, somebody or some company may think that it is horrible. But for the passed experience of flood last year, it was proofed that the company which thinded and planed for the Worst Scenario system. Suppose, if it happened in the worst case, he would get the least pain. For one who thought for the best living, he would get extremely hurt.