In today's changing business climate, procurement's role is not just about getting the right goods and services at the best possible price, with the right volumes, at the right time. Their role, among other things, also involves helping to identify procurement risks, and with organizational involvement, develop a risk mitigation strategy that reduces a company's vulnerability to potential supply management impacts. Procurement folks need to keep in mind that focusing on just a past history of events and trying to predict low-probability, high-impact events are pretty much impossible. For procurement and executive management, it becomes more effective to identify the outcomes—that is, to develop a plan to evaluate the possible impact of “potential” extreme events.
A company's failure to plan, measure, and mitigate risk factors in their supply base before a major disruption occurs can create a ripple effect that can negatively impact a product or service's quality, supplier relationship and thus ultimately affect corporate earnings. Consequently, the financial impacts can affect some companies for some years after the risks were identified and being mitigated. Like a major heart attack straining the flow of blood, a disruption shuts off access to important information, products and causes internal service issues for the organization, suppliers and customers. Similar to a major health issue, it can have lasting financial effects on a company's business health.