Jim had no idea the kinds of procurement risks he faced.
Five steps to address procurement risk.
Jim G. thought he had done his homework.
The VP of Supply Chain had counted on Jim, a senior procurement executive, to solve a serious supply issue that had threatened to derail production of one of his company's best-selling products. When he found a supplier that could guarantee an uninterrupted supply of coltan, a metal ore from which tantalum could be extracted and used in their cell phones, he leapt at the opportunity.
Jim asked several questions related to the ore's origin. However, he failed to include a clause in the contract obligating the supplier to report any sourcing of the mineral from conflict countries.
Jim was also unaware that to keep the supply of coltan flowing, his supplier had bribed a few officials along the way.
Now, both the SEC and the U.S. Department of Justice (DOJ) were investigating Jim's company as well as the Chief Operating Officer (COO) and him personally for Dodd-Frank and Foreign Corruption Practices Act (FCPA) violations.
The company could face fines in the tens of millions. More significantly, there was a possibility that he and his boss could go to jail because of the bribes his supplier was doling out on their behalf.
Jim was in a state of despair. He had no idea the kinds of procurement risks he faced when he sought to secure a continuous supply of coltan. And now his career was in jeopardy.
Our series, 5: insights for executives, explores the questions:
| The answers in the issue are supplied by:|
| ||Niul Burton |
Principal, Ernst & Young LLP
Supply Chain Advisory Services
+1 214 969 0787
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