Risk Management in the Sourcing Environment

Course Synopsis

Sourcing is a common phenomenon in today’s marketplace, due to its labor, technical and cost-saving solutions for businesses and government. But, in order for organizations to reap the maximum benefits of sourcing, they must manage the myriad risks that can accompany a sourcing relationship.

This course deconstructs the sourcing relationship into six major stages and describes how risk management can be applied to each stage to ensure contract success.

You will learn to apply risk management methodology to real-life sourcing scenarios. The course also takes an in-depth look at the unique risks of global sourcing endeavors and presents proven strategies for addressing such risks. This course is appropriate for a broad spectrum of sourcing professionals. And, because the course covers all types of sourcing relationships – from purchasing to business process outsourcing – the concepts and methods taught can be applied to all sourcing situations.

Reminder: This is not a course in the basics of contract management. It assumes that the participant has already taken Contract Management Principles and Practices, Federal Contracting Basics or has equivalent experience involving contract management.

Learn How To

• Achieve your organization's goals by improving the outcome of sourcing arrangements
• Manage risk in a sourcing environment using ESI's Risk Management Model to identify, analyze, and respond to risks during all stages of the sourcing life cycle
• Recognize the value of
  • investing in thorough risk management early in the life cycle
  • Creating and promoting a collaborative relationship between buyer and seller
• Use consistent processes, tools, and techniques for managing risk
• Apply risk management methodology to any sourcing situation, the five different types of arrangements and the different stages of the sourcing life cycle
• Recognize the value of creating and promoting a collaborative relationship between buyer and seller
• Create a common framework between buyer and seller for dealing with risk

Course Topics

1. Introduction to Risk Management in the Sourcing Environment
   1. The sourcing environment
      • ESI’s Sourcing Continuum
      • ESI’s Collaborative Sourcing Model (sourcing life cycle)
   2. Risk
      • Elements of risk
      • Types of risk
      • Typical risks in sourcing
   3. Risk management
      • Benefits in sourcing environment
      • Collaboration and communication
      • ESI's Risk Management Model (abbreviated)
2. Risk Management and the Stages of the Sourcing Life Cycle
   1. Sourcing life cycle stages (fundamentals, typical activites and variation on continuum)
      • Strategy and planning
      • Search and select
      • Negotiation and contract award
      • Start-up and transition
      • Relationship and governance
      • Termination and migration
   2. Risks and strategies
      • Recurring operational risks and barriers common to every stage
      • Unique risks that vary by stage
      • Risk impact on current stage versus future stages
      • Recommended strategies for typical risks
   3. Risk management-
      • As applied to each life cycle stage
      • An iterative and overarching process
      • Scalable for contract complexity
3. Risk Assessment and Recovery of Troubled Sourcing Arrangements
   1. Today's problems v. tomorrow's risks
   2. Rapid assessment and recovery process
   3. Key elements of assessment
4. Incentives and Deductions/Penalties
   1. Global Sourcing
      • A typical profile
      • Potential benefits
      • Versus domestic sourcing
   2. Risk management in global sourcing
      • Single greatest risk
      • Life cycle stages
   3. Global sourcing risks and strategies
      • Typical areas of risk by life cycle stage
      • Recommended strategies
5. The Big Picture-Improving Sourcing Outcomes
   1. Risk Management-a critical component of sourcing arrangements
   2. Benefits of managing risk throughout life cycle
   3. Key to successful sourcing
   4. Key to recovering a troubled sourcing arrangement