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Procurement Contracts Risks, Essay Example

Pages: 1

Words: 373

Essay

Risks are common place phenomena in every business setting. In this regard procurement contracts are therefore not an exemption. The risks in the procurement contracts in most cases emanate from the supplier and trickles down the chain to the buyer. However in some situations the supplier might face risks that may arise from the buyer. There is need for the procurement officer to conduct a proper risk evaluation process to solve the various risks in the process.

As a procurement officer I have experienced some of the following risks; long lead times due to suppliers failure to deliver the goods in time which in turn affects the production process in the organization. I have experienced risks that emanate from delivery of low quality goods, defective goods or supply delivering the wrong type of good. This case affects the production process and results to loss of money by the organization. Defective and low quality goods are not able to match the production requirements that set by the organization and hence loss of money (Caldwell, & Roehrich, 2009).

The other risks have experienced is that some suppliers are fraudulent people, especially the suppliers that you meet for the first time.  Most of these suppliers deliver the invoice note to the organization before the actual arrival of the purchased goods and there after claim for payment before the goods arrive. On the arrival, the goods received are usually less than those paid for in the invoice (Lewis, & Roehrich, 2009).

There risks that may not be blamed on either supplier or buyer such as logistics difficulties that emanate from transport problems such as road jams and accidents. However the buyer and the supplier should ensure proper arrangement for the delivery process to avoid such cases.

From my experience as a procurement officer, the risks in procurement contracts emanate from the supply side of the contract and therefore a procurement officer should be very carefully when dealing with suppliers.

References

Caldwell, N., & Roehrich, (2009). Procuring complex performance in construction: London      Heathrow Terminal 5 and a private finance initiative Hospital. Journal of Purchasing and         Supply Management.

Lewis, &  Roehrich, (2009). Contracts, relationships and integration: Towards a model of the    procurement of complex performance. International Journal of Procurement          Management, 2(2):125-142.

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