What Activities Help Manage Risk in Procurement?
There are risks inherent to many business processes. That’s why we suggest automating many processes with Laserfiche Forms and Workflow. Using Laserfiche, an auditor can follow the exact process of the document and view the steps in the approval workflow.
Generally, procurement risk happens when the purchasing or sourcing process becomes unreliable. An example is an event occurring that negatively impacts procurement or causes liability. Procurement, in particular, is a process that can be fraught with risk for local agencies.
Irregularities in the purchasing process can cause problems for local agencies, even if it’s just bad press. To this end, purchasing or financial department must perform regular risk assessments, including the evaluation process, contact awarding, contract management, and renewal or completion.
Insofar as evading risk, most agencies understand risk mitigation during RFP building and vendor selection. The trouble is often ignored when the process moves ahead to contract administration. Below you’ll find a few ways to ensure risk is considered or, as we often say, “baked in.”
Notably, experts note that finance leaders should ensure alignment between procurement and the overall agency objective, and the purpose of this procurement matches with the agency’s purpose.
Another mitigating approach is to involve the stakeholders in all the decision stages. Stakeholders can be internal and external and are often department heads, but not always. For instance, when procuring software or a new process that will impact end users, ensure that they are included in the decision. Another issue that sometimes occurs with software procurements is integrations. The newly purchased software may have to be integrated with existing business-critical systems. If this is the case, it may benefit the agency to include product management from the legacy system’s ISV. This inclusion will alleviate difficulties such as change orders.
Work with subject matter experts (SMEs). While not an automatic success, SMEs can provide insights that can be had with a quick Google. Vendors are often a good source when engaged with a thorough RFI. Typically, in the public procurement process, agencies disallow a supplier from competing in a procurement who was involved in creating the RFP. However, soliciting industry expertise through an RFI generally absolves this issue when managed. Using suppliers as SMEs can also be achieved through structuring your RFP so that vendors can demonstrate their industry expertise and how it aligns with your agency's objectives in their proposal. We’ve seen this done well when agencies provide in-depth user stories, and then we can deploy software to that end.
Build compliant contract processes- Work with your compliance department, legal, and records manager to justify your compliance with government purchasing regulations. Any process can be replicated in Laserfiche, providing peace of mind and compliance when the auditors are at your door.