Inherent Risk Tiering in Supplier Life Cycle Management

Abstract

The goal of this thesis was to analyze and implement the new procurement policy of Rabobank to stay compliant with rules and regulations. As a wholly-owned subsidiary, Obvion has its procurement policy that is based on components of the procurement policies of Rabobank. The new 2022 Rabobank policy ‘Global Standard on Sourcing and Supplier Management’ states that supplier tiering must be a part of its third-party risk management strategy in contract management. The problem was that Obvion and Rabobank are two very different organizations it was not feasible that a new policy could be implemented as is, or even at all. Thus, the aim was to verify if Obvion would benefit from implementing supplier tiering into their procurement processes.

This thesis project used the action research methodology. The thesis relied on the use of qualitative research methods. Semi-structured interviews were conducted with stakeholders from within the procurement team and focused on the implementation of the new policy. In combination with a GAP analysis, a current state could be determined. The theoretical framework focused on the most common segmentation models and best practices in risk tiering and supplier life cycle management. The development part included the anticipation of a real-life implementation, a stakeholder analysis, and a communication plan.

As a result of the thesis, the implementation approach was formulated and tested through a pilot study. This pilot study focussed on the implications of the new policy on the procurement team. The development resulted in an 18% decrease of contracts in the contract database, and potential time savings of 756 hours per year or 0,4 FTE, equalling cost savings of up to €40.068 per year for Obvion’s procurement team.