☛ Want the latest procurement and supply chain news delivered straight to your inbox? Sign up for the Supply Management Daily
10 November 2011 | Angeline Albert
professionals and their outsourcing suppliers are unclear as to where the
responsibility for risk management and due diligence lies between them, leaving
both parties exposed.
a key finding Outsourcing in a brave new world,
a report published by law firm NortonRose Group,
which highlights the views of heads of procurement and chief information
officers from 74 businesses.
to the research, opinion is sharply divided on whether the customer or the
supplier should take responsibility for political/regional risks. The research
revealed only 8 per cent of providers thought they should manage such risk for
an outsourcing project, compared with 49 per cent of customers who said suppliers
should manage it.
is based on lawyers’ interviews with companies and their outsourcing suppliers
in the UK and other parts of the world. Norton Rose said firms must openly talk
to vendors about risks in different locations. While customers said suppliers
should ensure they can operate in the location they have chosen, the report
said procurement should familiarise itself with that area and consider a
companies and their suppliers agreed that capability analysis and financial
checks were the most important due diligence activities. The report said some
65 per cent of companies do not conduct detailed due diligence on incoming workers provided by their supplier and said some vendors did not name key
staff in outsourcing contracts.
group head of technology and innovation at Norton Rose Group, said: “The
majority of customers assume that their suppliers will have done the necessary
due diligence on their own staff and do not see the need to repeat the
exercise. This is surprising given the impact a single rogue employee can have
on the reputation of a business and all associated organisations, as underlined
by the scope of the Bribery Act 2010.”