Risky Opportunities

A report was recently released by the Controller and Auditor General named ‘Insights to Local Government’. It stated that councils are expected to “be properly informed about risks and opportunities to service delivery, in order to make relevant decisions and manage the trade-offs of risks with cost and level of service”.

by Fiona Nissen, Regional Manager – ArcBlue New Zealand.
In collaboration with Portt

Third party suppliers are a crucial contributor to the success in your community. How well do you understand the current situation with your suppliers? Here are some things you can do to improve your supplier risk management:

  1. Review the contract (if you have one); otherwise the first step is to establish one! Ensure the costs, risks, and service delivery expectations are defined and understood by both parties. Your procurement process should clearly define how a contract is established; the legal and commercial aspects are clearly defined and you should regularly review the contract to check it is still relevant for Council.
  2. Talk to your suppliers. This seems obvious; but ask them how they see the relationship evolving with Council, then work together to identify risks and ensure any roadblocks are managed. Ask your suppliers what you can do differently – often suppliers can suggest better ways of collaborating – whether its efficiency, cost savings or risk avoidance, it’s always useful to consider an alternative perspective.
  3. Measure progress. There is no point establishing service levels and key performance indicators if you do not measure progress! Data-based decision making and performance monitoring reduces risks and provides evidence that public funds are well managed.
  4. Keep it visible. Ensure key information is extracted from your contracts and loaded in a structured fashion. Without it, your contracts register adds no value and does not help you to make smarter decisions. Make sure your contract register can be overlaid against your finance system to see how much you have spent under contract. This will help identify the next opportunities for procurement.

 

How well do you understand your supply base? What could you do differently that would reduce risk? Like everything, measure the impact and report to your Audit and Risk Committee – your Council Executives will thank you for it.

Here is the link to the OAG report

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