Procurement, Risk Management, Supply Chain Uncertainty – Supply Chain Management Concepts

Procurement refers to the acquisition of commodities i.e. goods, services or even works from a different external source(Halldorsson et al., 2003). Any acquisition should be done in the best possible interest of the procurer. The goods, services and or even work should be acquired at the lowest possible cost, be of the desired quality and delivery be in the best time to optimize the returns of the person/firm buying. The process involves the preparation of demand, submission, receipt, verification and processing of payment. Procurement process can either be direct or indirect nature.

Risk management on another level, involves the identification, evaluation, listing and ranking of risks which should be followed by controlled and economical combination of resources to mitigate or to minimize exposure to uncertain events(Halldorsson et al., 2003). Risk is a threat faced either from within the organization or from the market. Internal risk emanate from events such as project failure, production failure, legal liabilities among others. External risk can result from natural causes and disasters, credit risk due market rates of interest changes, attack from adversaries and other more faced by a firm by the virtue of its existence.

Lastly, Supply chain uncertainty is the decision making process where the decision maker is not sure on what to decide(Halldorsson et al., 2003). It is precisely because of lack of information on the supply chain and its environment, thus not able to correctly predict the effects of the uncontrolled actions on the supply chain. To manage this, the management should have clear objectives, sound and reasonable forecasts, good data base on the environment, have alternative actionable plans and estimate the effects of these alternatives prior to their implementation.

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