Question

A local services company is looking to add a service request and tracking system to their website.

Address the following:

What are some possible sources of procurement risk for this project?

What steps can be taken to mitigate these risks?

Answer 1

While adding service request and tracking system to the website the company needs to ensure enough resources, cost saving opportunities, quality equipments for tracking and ensure the terms mentioned in the service level agreement are legal and achievable.

The main procurement risk that the service company may face includes quality risks as the quality of the equipments affect the services. The tracking system also should use high quality tracking devices to ensure accurate location tracking to avoid customer dissatisfaction. In order to mitigate this risk, the company needs to be careful while making supplier selection and should select the supplier after analyzing the quality of the products.

Another risk can be economic risk due to the cost of vehicle tracking per month because the cost of tracking depends on the features that needs to be tracked and more features would add more cost. Hence in order to mitigate the cost related risk, the company should find a reliable supplier who can provide the tracking services at affordable cost.

Another risk is the risks due to lack of purchase planning. When the company is expanding the services it should be clear on the requirements and plan the purchase activities well to ensure enough supply of goods and service. Lack of planning may lead to inadequate resources to accommodate the new services and customer complaints. In order to mitigate the risk, the company should analyze the requirement along with the locations that needs to be tracked, cost involved and the company’s financial position and then plan on the number of tracking equipments and other products that needs to be purchased while expanding.

Legal risks also may arise because of the delay caused by suppliers as the customers may sue the company if they do not receive service as committed. To mitigate the chances of legal risks, the company should analyze the supplier capabilities and commit on the service terms to avoid the chances of breaches. Another step the company can take is to select trustworthy the suppliers based on their past performance.