Project Risk and Procurement Management Report for Business

This report provides a comprehensive analysis of project risk and procurement management, focusing on Supplier Relationship Management (SRM) and risk mitigation strategies. It begins with an introduction to procurement and project risk management, defining key concepts and outlining the procurement process. The discussion section delves into SRM, emphasizing its importance in managing supplier relationships and differentiating between various supplier types. The report then presents a case study of Irwin's Bakery, a UK-based food manufacturer that sources materials from Greece. It examines the company's supply chain, SRM practices, and the various risks it faces, including ownership/awareness of supplier risk, material outsource risk, supplier operational service failure risk, supplier business continuity risk, contractual risk, dependency risk, supplier financial risk, supplier capacity risk, and relationship quality risk. Mitigation plans are suggested for these risks, and the report concludes with a summary of the key findings and implications for effective project management and procurement.

Running head: PROJECT RISK AND PROCUREMENT MANAGEMENT
Project Risk and Procurement Management
Name of the Student
Name of the University
Author’s Note:

1
PROJECT RISK AND PROCUREMENT MANAGEMENT
Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................3
Supplier Relationship Management.............................................................................................3
Irwin’s Bakery.............................................................................................................................4
Supply Relationship Management in Irwin’s Bakery..................................................................6
Risks in Irwin’s Bakery...............................................................................................................6
Mitigation Plans of Risks for Irwin’s Bakery..............................................................................9
Procurement Function................................................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................13

2
PROJECT RISK AND PROCUREMENT MANAGEMENT
Introduction
Procurement is the procedure for searching, obtaining several goods and services,
agreeing to the terms by a competitive bidding procedure (Phillips 2013). This particular
procedure of procurement is utilized for ensuring the buyer for receiving the various goods,
works and the services at the most affordable price. This procedure is executed when the various
characteristics like location, time, quality and the quantity are compared with the other
characteristics (Larson and Gray 2013). The corporations and all the public bodies always define
the procedures, which are intended for promoting the open and fair competition for the business
for the minimization of the risks. These risks mainly mean to the exposure to any type of
collusion and fraud. The project procurement management can be defined as the process of the
supply of goods that are received and ordered. This procedure is sub divided into five portions,
which are initiating and planning, selecting, contract writing, monitoring, closing, and
completing (Kendrick 2015). The project risk management can be defined as the procedure for
minimizing or mitigating the risks in a project with the help of certain steps.
The following business report outlines a brief discussion on the Supplier Relationship
Management or SRM with the help of project procurement and project risk management. The
business report describes about a particular business of United Kingdom that sources food
materials from Greece (Kerzner 2013). This business often undergoes through various types of
threats during the procurement of the services and products. This following report further
describes about the management of the risks of the various threats, which are arising in their
business (Bryde, Broquetas and Volm 2013). This report has taken the example of a popular

3
PROJECT RISK AND PROCUREMENT MANAGEMENT
bakery shop of United Kingdom, namely Irwin’s Bakery. Relevant information is provided in the
report regarding this famous bakery company.
Discussion
Supplier Relationship Management
Supplier Relationship Management or SRM is the first and the foremost approach that is
utilized for the engagement of the suppliers on such a level, which reflects all the priorities of the
customer company and how best these requirement can be fulfilled (Pryke and Smyth 2012).
Supplier Relationship Management is a process of differentiation, which identifies that not all the
suppliers are of similar types and therefore not all the relationships between customers and
suppliers can be dealt with one single strategy.
The relationship between the customer and the supplier is managed and controlled with
the help of the supplier relationship management (Edwards and Bowen 2013). The holistic nature
of the supplier relationship management approach needs the overall engagement and consent of
the entire company. Perfect supplier relationship management cannot be attained through only
the functionality of procurement. At the level of partnership, this means it is the involvement of
the executive team; at the very minimum. This eventually means those functions that are acting
in a structured way so that the company does not appear unstructured or disorganised to the outer
world (Liu, Meng and Fellows 2015).
As with most of the procurement activities and at the most basic level, the Supply
Relationship Management or SRM can be utilized for the reduction of both the costs and the
prices paid to the company. By the development of proper styles of collaboration, even the ones
that adversarial, it is possible for saving money. The suppliers have various expectations like

4
PROJECT RISK AND PROCUREMENT MANAGEMENT
how the customers will act and how will they respond (Fleming and Koppelman 2016). The main
feature for developing an approach of Supplier Relationship Management or SRM is completely
based on the supplies of the company. As the customer company will develop its inward
understanding and own maturity, it will become possible for the development of more value
adding capabilities to the relationships that are being nurtured. Initially this is often at the service
or product level. However, as the customer company progresses this often expands to involve the
sourcing strategy and an evaluation strategy that are based around the provisions of core
competencies and of non core competencies (Leach 2014). The core competencies are internal
and the non core competencies are external. Whilst the above focuses heavily upon inward
reflection, it quickly becomes just as essential for understanding what the individual suppliers
and the supply market are capable of delivering to the company. A perfect strategy of
relationship will carefully discriminate between the external and internal provision in a way that
does not compete or compromise with any other. At this particular point, the importance is given
on the alignment of the organisations in order to make sure that the services and the products
flow through the supply chain and network towards the end customer (Eweje, Turner and Müller
2012). The concept of flow that are both value and physical brings into focus the need for stable
and capable processes that perform over time (Xiang et al. 2012). The companies that are high
performing have supply that are high performing networks and this comes from the alignment of
approaches and objectives to how things are done across the entire company. By knowing what
is expected, suppliers are able to manage their own businesses for the long term (Burke 2013).
Not only is this more cost effective, it is also more robust from an operationally competitive
perspective.

5
PROJECT RISK AND PROCUREMENT MANAGEMENT
Irwin’s Bakery
Irwin’s Bakery is a United Kingdom based organization that manufactures bread,
muffins, cakes and many more (Irwinsbakery.com, 2017). This is the largest independent bakery
of Northern Ireland. It supplies the broader range of all traditional breads of Ireland. The main
super markets of Irwin’s Bakery are in United Kingdom and Republic of Ireland. This particular
company has more than four hundred and fifty employees. The production site of this company
is about 100000 square feet area. Every week it manufactures more than one million loaves and
the morning goods (Irwinsbakery.com, 2017). The company, Irwin’s Bakery was first founded in
the year 1912 in the Co. Armagh town of Portadown. W. D. Irwin, who was then a grocery
retailer, founded the company. He and his family members used to bake cakes and other bakery
items at home for their shop. Then, more bakers were employed and in the year 1965, this bakery
launched their specific brand of plain or batch bread. They named it as Nutty Krust and this
became extremely popular in entire Ireland (Irwinsbakery.com, 2017). This company gets all its
food materials from several countries. One of the major countries that export food materials to
this company is Greece. This is one of the most popular food manufacturing companies in United
Kingdom that has customers from all over Europe. It sources its food materials or raw materials
from everywhere. However, the main source of the food materials is from Greece. Greece is
famous for its cheap and good quality of food like cheese, milk, flour and many more. Irwin’s
Bakery for their business procures these raw materials (Irwinsbakery.com, 2017). They do these
by simply following procurement management in the company. The strategic procurement
depends on strong Supplier Relationship Management or SRM where procurement professionals
are concerned about developing robust supplier relationships and negotiating favourable terms
and conditions. In the future, it is expected that supply chain structures will become more

6
PROJECT RISK AND PROCUREMENT MANAGEMENT
complex and choosing the right supplier will be more critical. Increasingly stringent supplier
requirements will become routine, and demanding purchasers will expect suppliers to
demonstrate their essential competencies (Irwinsbakery.com, 2017). Supply chain risk, scarcity
of raw materials, environmental, sustainable and economic issues will lead to increased pressure
on these buyer supplier relationships.
Supply Relationship Management in Irwin’s Bakery
The SRM or Supplier Relationship Management cannot be executed without a
elementary modification in the procurement, the company it serves and the suppliers involved in
the new approach (Pretorius, Steyn and Jordaan 2012). There are innovative approaches of
working that may be procurement led. These approaches need the engagement that is honest and
active of all those approaches that are involved. Making structured and controlled relationships,
which normally balance the objectives that are long term with the short term requirements will
need the flexibility on both the sides if this is to be successful. This does not mean that there will
be a reduction in the power of the company (de Carvalho, Patah and de Souza Bido 2015).
Rather, this means working as the portion of a particular network for ensuring that the value of
each and every player is influenced towards the requirements of the end customer and of each
company within the supply chain.
Risks in Irwin’s Bakery
Irwin’s Bakery often undergoes certain risks and threats of economy and this mainly
occurs from the supplier relationship management (Kendrick 2015). There are several types of
risks and threats that are common for supplier relationship management in Irwin’s Bakery. The
common risks are as follows:

7
PROJECT RISK AND PROCUREMENT MANAGEMENT
i) Ownership / Awareness of Supplier Risk: The ownership or awareness of supplier risk
is the most common risk in Irwin’s Bakery.
ii) Material Outsource Risk: The material outsource risk can be defined as the outsource
relationship, which carries the significant threat of the end customer (Pretorius, Steyn and
Jordaan 2012). For this threat or risk, the customer will be completely responsible.
iii) Supplier Operational Service Failure Risk: The operational service failure have the
most important and significant impact of the end customer or the impact of the substantial non
end customer (Xiang et al. 2012). These impacts mainly refer to as the reputational, financial,
legal, operational and many more. Irwin’s Bakery often undergoes this type of supplier
operational service failure risk or threat in its company.
iv) Supplier Business Continuity Risk: The supplier business continuity risk is the most
important and significant risk for any organization (Kendrick 2015). The disaster recovery plan
is the example of the supplier business continuity risk. Irwin’s Bakery often undergoes this type
of major risk or threat in its business.
v) Contractual Risk: The bakery shop has annual contracts with certain companies for
the procurement of their business. Irwin’s Bakery brings all of its products from various places.
The major source of food materials for the company is Greece (Pritchard and PMP 2014). Often
they face or undergo various risks for the failure of contract. When the sources of food materials
will be stopped, it is evident that the overall manufacturing of the food materials will be stopped.
Thus, this is one of the most significant risks of Irwin’s Bakery.
vi) Dependency Risk: Irwin’s Bakery is dependent on the suppliers of the company. They
supply the raw materials from Greece and then only, the food materials can be manufactured.

8
PROJECT RISK AND PROCUREMENT MANAGEMENT
Thus, this dependency on the suppliers is extremely harmful and risky for Irwin’s Bakery. The
dependency often creates problem for the company.
vii) Supplier Financial Risk: This is again one of the most significant risks for any
organization. The risk of the financial state of suppliers often becomes a huge problem for the
company, Irwin’s Bakery (Kendrick 2015). The organization is not capable of fulfilling all the
demands of the customers because of their financial condition or sometimes the supplier does not
supply the raw materials even after getting the money.
viii) Supplier Capacity Risk: Often the supplier does not have adequate capacity for the
requirements of the manufacturer. The client’s demands and the requirements cannot be fulfilled
if the supplier do not have adequate capacity of resources. They will not be able to fulfil the
demands of the clients and thus the supplier will lose one of its customers.
ix) Relationship Quality Risk: When the relationship between the supplier and the
customer is broken due to past incidents, there is a high risk that the quality of the raw materials
he would be sending, will be at stake (Xiang et al. 2012). This particular type of risk is extremely
common for any company and mainly for manufacturing organization. Irwin’s Bakery can
undergo this type of risk of relationship quality as they have their raw materials from all over
Europe and especially from Greece.
x) Strategic Risk: Irwin’s Bakery often undergoes this type of risk in their business or
organization. The strategic risk can turn out to be extremely risky in terms of any growth and
development (Eweje, Turner and Müller 2012). If the strategies of the organization will not be
perfect, there is a high chance that the organization or company may suffer or incur losses.

9
PROJECT RISK AND PROCUREMENT MANAGEMENT
xi) Reputational Risks: This is another important risk for any organization. The
reputation of the customers mainly depends on the impact of its suppliers. These risks often can
be termed as risky and it has a negative impact on the suppliers.
xii) Economic Risk: This is the most significant and important risk for any organization.
When the particular company will not have enough or adequate economic resources, it is evident
that the organization will not be able to fulfil the demands of its customers (Pritchard and PMP
2014). Economic risks mainly occur when the company does not have enough customers or
clients.
Mitigation Plans of Risks for Irwin’s Bakery
These risks are extremely vulnerable for any organization. They often turn out to be risky
and thus these often become major problems for that organization (Kendrick 2015). However,
these above mentioned risks or threats could be mitigated or reduced by undertaking certain
approaches or steps. The ways for the reduction of these risks in Irwin’s Bakery are as follows:
i) Supply Chain: The company, Irwin’s Bakery knows their supply chain perfectly and
for gaining the view of end to end supply chain, the company has set certain employees. These
employees look into the supply chain regularly and if there is any scarcity in the supply chain,
the employees directly report to the organization (Eweje, Turner and Müller 2012). The supply
chain management of the company is checked regularly. They never neglect their upstream
supplier relationships. It is extremely important that the manufactures of the company make the
comprehensive inventory for all of their supply chain relationships.
ii) Identification of the Risks related to Suppliers: The Company always identifies the
risks that are related to the suppliers and thus this identification reduces the chance of losses in

10
PROJECT RISK AND PROCUREMENT MANAGEMENT
the organization (Zou and Sunindijo 2013). The suppliers can have several risks like contract
risks, reputational risks, financial risks, information system failures, economic risks, strategic
risks and many more.
iii) Assess the Supplier Risks: The supplier risks are immediately assessed by the
company and thus this reduces the risks of Irwin’s Bakery.
iv) Leverage Technology: The important technology is leveraged and this reduces the
risks of the supplier management. When the size of the supply chain is increased, the supplier
risk management programs are costly, tedious and resource intensive (Taylor, Artman and
Woelfer 2012). Irwin’s Bakery bakes cakes, muffins and many more items. All this baking is
done with the help of technology and thus this technology is leveraged regularly or periodically.
v) Manage Supplier Risks: The supplier risks are managed or mitigated with the help of
perfect management strategies. Irwin’s Bakery does this with the help of various and several
employees, who look after the overall growth and development of the organization (Pritchard
and PMP 2014). This helps them to mitigate or manage the risks of the suppliers easily and
eventually.
These above mentioned mitigation plans help Irwin’s Bakery to overcome their risks and
threats in their business.
Procurement Function
Procurement function manages the network of the vendors and suppliers easily, quickly
and globally. This management becomes inoperative due to the rapid shifts in the business
environment (Kendrick 2015). This procurement is the procedure for searching and agreeing to
the conditions and obtaining the services, goods or works from any external source. This

11
PROJECT RISK AND PROCUREMENT MANAGEMENT
procurement function helps to control the network of the suppliers, vendors or the supply chain
and thus the organization mitigates or reduces the risks of their supplier relationship management
(Zou and Sunindijo 2013). Moreover, procurement management is the major factor for the
success of any organization as it fulfils the organizational goals, objectives and expectations of
the stakeholders.
There are various case studies or recent cases for fraud in procurement function in the
organization. However, these frauds can be reduced by various steps. These risks often turn out
to be extremely risky for the organization and the organization can suffer various problems in the
business.
Conclusion
Therefore, from the above discussion it can be concluded that, procurement management
is the procedure of the supply of services or goods, which are ordered and received. This process
is further divided into five major parts that are initiating and planning, selecting, closing, contract
writing, monitoring and completing. The project risk management can be defined as the process
for the mitigation or the minimization of the risks in a particular project with the help of several
steps. Procurement is the process for searching, acquiring various services and goods, agreeing to
the conditions by a competitive bidding process. This particular process of procurement is used
to ensure the buyer for receiving the several services, goods and the works at the price that is
absolutely affordable. This process is implemented when the several characteristics like quality,
quantity, time and location are compared with all the other characteristics. The public bodies and
the corporations always describe the processes that are intended for the promotion of the fair and
open competition for the organization for the reduction of the risks. These risks mainly mean to

12
PROJECT RISK AND PROCUREMENT MANAGEMENT
the exposure to any type of fraud or collusion. The above report provides a brief description on
the Supplier Relationship Management or SRM with the help of project procurement
management and the project risk management. This particular business report describes about a
particular United Kingdom business, which supplies food materials from Greece. The example
taken in this report is Irwin’s Bakery, which is located in United Kingdom. This business often
suffers through several types of risks during the procurement of their products and services. This
report discusses about the management of the dangers of economic and other risks that are
arising in the business. The procurement function manages the network of the suppliers and the
vendors globally. Relevant case studies are provided in the report for understanding the
procurement management of the United Kingdom business.

13
PROJECT RISK AND PROCUREMENT MANAGEMENT
References
Badri, A., Nadeau, S. and Gbodossou, A., 2012. Proposal of a risk-factor-based analytical
approach for integrating occupational health and safety into project risk evaluation. Accident
Analysis & Prevention, 48, pp.223-234.
Bryde, D., Broquetas, M. and Volm, J.M., 2013. The project benefits of building information
modelling (BIM). International journal of project management, 31(7), pp.971-980.
Burke, R., 2013. Project management: planning and control techniques. New Jersey, USA.
Crawford, J.K., 2014. Project management maturity model. CRC Press.
de Carvalho, M.M., Patah, L.A. and de Souza Bido, D., 2015. Project management and its effects
on project success: Cross-country and cross-industry comparisons. International Journal of
Project Management, 33(7), pp.1509-1522.
Dey, P.K., 2012. Project risk management using multiple criteria decision-making technique and
decision tree analysis: a case study of Indian oil refinery. Production Planning &
Control, 23(12), pp.903-921.
Edwards, P. and Bowen, P., 2013. Risk management in project organisations. Routledge.
Eweje, J., Turner, R. and Müller, R., 2012. Maximizing strategic value from megaprojects: The
influence of information-feed on decision-making by the project manager. International Journal
of Project Management, 30(6), pp.639-651.
Fewings, P., 2013. Construction project management: an integrated approach. Routledge.

14
PROJECT RISK AND PROCUREMENT MANAGEMENT
Fleming, Q.W. and Koppelman, J.M., 2016, December. Earned value project management.
Project Management Institute.
Flyvbjerg, B., 2013. From Nobel prize to project management: getting risks right. arXiv preprint
arXiv:1302.3642.
Hopkinson, M.M., 2012. The project risk maturity model: Measuring and improving risk
management capability. Gower Publishing, Ltd..
Hornstein, H.A., 2015. The integration of project management and organizational change
management is now a necessity. International Journal of Project Management, 33(2), pp.291-
298.
Irwinsbakery.com. (2017). Irwin's Bakery. [online] Available at: https://www.irwinsbakery.com/
[Accessed 4 Nov. 2017].
Jugdev, K., 2012. Learning from lessons learned: Project management research
program. American Journal of Economics and Business Administration, 4(1), p.13.
Kendrick, T., 2015. Identifying and managing project risk: essential tools for failure-proofing
your project. AMACOM Div American Mgmt Assn.
Kerzner, H., 2013. Project management: a systems approach to planning, scheduling, and
controlling. John Wiley & Sons.
Larson, E.W. and Gray, C., 2013. Project Management: The Managerial Process with MS
Project. McGraw-Hill.
Leach, L.P., 2014. Critical chain project management. Artech House.

15
PROJECT RISK AND PROCUREMENT MANAGEMENT
Liu, J., Meng, F. and Fellows, R., 2015. An exploratory study of understanding project risk
management from the perspective of national culture. International Journal of Project
Management, 33(3), pp.564-575.
Liu, J.Y., Zou, P.X. and Gong, W., 2013. Managing project risk at the enterprise level:
Exploratory case studies in China. Journal of Construction Engineering and
Management, 139(9), pp.1268-1274.
Morris, P.W., 2013. Reconstructing project management. John Wiley & Sons.
Phillips, J., 2013. PMP, Project Management Professional (Certification Study Guides).
McGraw-Hill Osborne Media.
Pretorius, S., Steyn, H. and Jordaan, J.C., 2012. Project management maturity and project
management success in the engineering and construction industries in Southern Africa. South
African Journal of Industrial Engineering, 23(3), pp.1-12.
Pritchard, C.L. and PMP, P.R., 2014. Risk management: concepts and guidance. CRC Press.
Pryke, S. and Smyth, H., 2012. The management of complex projects: A relationship approach.
John Wiley & Sons.
Taylor, H., Artman, E. and Woelfer, J.P., 2012. Information technology project risk
management: bridging the gap between research and practice. Journal of Information
Technology, 27(1), pp.17-34.
Turner, R., 2016. Gower handbook of project management. Routledge.
Walker, A., 2015. Project management in construction. John Wiley & Sons.

16
PROJECT RISK AND PROCUREMENT MANAGEMENT
Xiang, P., Zhou, J., Zhou, X. and Ye, K., 2012. Construction project risk management based on
the view of asymmetric information. Journal of construction engineering and
management, 138(11), pp.1303-1311.
Zou, P.X. and Sunindijo, R.Y., 2013. Skills for managing safety risk, implementing safety task,
and developing positive safety climate in construction project. Automation in Construction, 34,
pp.92-100.