SIG University Certified Third-Party Risk Management Professional (C3PRMP) program graduate Kyle Brown discusses the value proposition and responsibilities for the key players in an effective third-party risk management program.

Each business unit owns the risks associated with the contracts they decide to enter into.  This is a fundamental principle built into third-party risk management (TRPM) programs. In large organizations, the program's success is highly dependent upon each Business Unit fulfilling their responsibilities.

The Business Unit Structure for Risk Management Success

The business unit needs to ensure they have a suitable organizational structure and resources to fulfill their third-party risk management program responsibilities. This includes having team members trained in specific competencies and adequate capacity based on the level of risk associated with the business unit's third parties and sufficient capacity based on the level of risk associated with the business unit's third parties.

Once the contract is set, the business unit is responsible for the activities and tasks related to owning the relationship ( “relationship management”), including communication, contract, performance, and risk management. Team Members who reside within a business unit who perform relationship management activities comprise the largest internal population of team members who should manage risk due diligence activities with third parties.

As we head into the fall of 2021, we prepare for procurement 3.0 with a host of exciting resources, industry research and webinars to elevate you in your role.

September CPO & Executive Virtual Series

SIG's CPO & Executive Virtual Series is an opportunity for the most senior procurement executives to gather with their peers in an interactive virtual environment to discuss their most pressing issues. On September 15, Nitin Khorana, Vice President from Icertis, will explore maximizing supply chain potential with contract intelligence, followed by topic-based discussions on digitalization within procurement and sourcing.

Join us for this executive-level conversation with actionable takeaways.

Power Hour Webinars

How to Align Procurement with Third-Party Risk for Successful Vendor Management

One of the biggest challenges that procurement teams face is aligning risk objectives with the rest of the organization. In fact, most companies struggle with ensuring that their risk management processes aren’t perceived internally as a roadblock, slowing down procurement and innovation.

In this webinar, Bryan Littlefair, CEO of Cambridge Cyber Advisers and past Global CISO of Vodafone Group and Aviva, will share his experience designing third-party risk management programs that align with procurement. 

For many US companies, understanding the total cost of IT talent services has always been challenging, and is even more concerning now as budgets and resources have tightened in a post-COVID-19 world. But as the need for change and innovation continues to grow, companies are rapidly shifting focus towards outsourcing as a solution to assisting in digital innovation.

Procurement commonly compares hourly rates because it’s an easy comparison.  Well, not exactly.  But the issue is that the invoice at the end of the month for a committed amount of work is what matters, not what the hourly rate states.  Overtime, 45-hour billing weeks, etc. are ways offshore vendors distort billings and make your hourly rate look lower to win deals. So, how can you avoid additional costs associated with services provided by your outsourcing partner?

At SMC2 we find that many Global Insourcing Center RFPs ask for hourly rates as a selection criterion to support cost control or optimization.   Hourly rates themselves are easy to compare but do not accurately reflect the actual costs to deliver services or projects.  Fixed bids make an attempt at solving this issue, but are often laced with caveats and take a significant effort to understand scope.  

Also, many people believe that although the rates in India are lower, it takes more resources to deliver the same value as a US resource. Ratios such as 3:1 or 2:1 are often cited, demonstrating a lack of understanding of India’s technical capabilities and, more so, the opportunity to optimize under a global team structure.

SMC2 has solved this issue by focusing on value generation instead of billable hours.  Our teams are measured at the same level as their US counterparts in terms of productivity. This is expressed as 1:1 productivity.  We provide the necessary time each week to guarantee a US-full time equivalent of contribution.   

If you’re a procurement technology provider familiar with SIG and the Global Executive Summit this fall, we hope you’ve also heard of us at Spend Matters.

If not, we won’t fault you. 

Spend Matters is the leading global procurement technology media, analyst and research firm. Combining daily news coverage with subscription research, deep technology analysis, and one-to-one advisory services, Spend Matters provides meaningful insight and tailored solutions for procurement buying organizations, consultants, investors and solution providers. 

Each year, Spend Matters releases the annual ‘50 Procurement Providers to Know’ and ‘50 Procurement Providers to Watch’ lists. The lists are made up of — you guessed it — 100 vendors determined by the entire Spend Matters analyst team to represent the best of the commercial providers that serve enterprise-level procurement organizations. Plus, the ‘Future 5’ list — 5 outstanding procurement technology startups with innovative technology prowess, momentum and staying power. 

This year marks the sixth annual release of the ‘50 to Know’ and ‘50 to Watch’, and we are beyond thrilled to be doing it LIVE in conjunction with the SIG Global Executive Summit. The lists will be published on Tuesday, October 12. Any vendor present at the Summit who is also on one of the lists will receive their award plaque (in person!) from Spend Matters. We’re excited to pose for photos with those vendors present and share the good news all over Spend Matters social accounts.

Haggling is not negotiating. I repeat, haggling is not negotiating. You are just “meeting in the middle.”

I remember watching an episode of the BBC’s “The Apprentice” in which the task was to buy a list of items in London. The would-be apprentice, Jim, went to a butcher to buy a steak. It was a classic haggle. The butcher started high and Jim started low. They ultimately met in the middle.

This back and forth is haggling, which is a valid method of resolving a conflict. But other ways to resolve a conflict exist, including negotiation. The difference is that haggling is just about the price, and largely the outcome depends on who starts the highest or lowest. But negotiation is about trading variables and takes more skill, which makes it an art rather than a blunt instrument.

Learning the art of negotiation can be done with a few simple, yet effective tools.

Tool 1: The Up-and-Over

As a child, my family lived in a modest three-bedroom house in Laindon, Essex. It had one of those garages at the front of the house but you couldn’t get to the garage through the house even though it was integrated into the building. You could only get to it through the big up-and-over door.

“Up and over” is also a negotiating tool to use when you want to counter propose, which means to reject an offer and replace it with one that suits you better.

Let’s say you are selling your car. After looking the car up and down and kicking the tires, the buyer says, “Would you take $4,500 instead?” Typically, you’d haggle and say, “No, but I would accept $5,000,” and on the haggle goes until you meet in the middle. In a negotiation, you might say, “If you can buy the other car I am selling too, I could move on the price.” “Another car?” the buyer replies. “I don’t want another car. That’s silly.”