AGENT-OPR……-enterprise.docVIP

AGENT-OPR…….. 3. RISKS AND UNDERTAKINGS 3.0.1 This section attempts to highlight some of the main risks facing the programme, risks which must be monitored during the remaining part of the project. It should be pointed out that none of the risks described below are considered to be serious enough to jeopardise project completion. 3.1 MAIN RISKS IDENTIFIED IN THE PROJECT SUBMISSION. that agents cannot establish viable businesses; that suppliers are not willing to extend credit direct; and that CARE could not manage the expansion of the Agent network. 3.1.1 The first problem cited has, in few cases, proved to be a real risk. Some of the traders have joined the scheme and, because of their lack of experience and poor business approach to their trading activities, have misused the large amount of cash flowing into the business - rather than using it to repay suppliers. This has caused some of them to default. In cases where the Agent did not default on repayment, poor management of the ordering, stock control and return of the consignment cycle can result in interest charges, wiping out the potential profit margin. CARE have instituted a number of mechanisms to combat these risks, such as; more stringent selection procedures, more relevant training and closer monitoring of performance. These have been quite successful to date. Action Point: The scope of Agents’ training should incorporate issues of inventory control and purchasing within an inflationary environment. 3.1.2 Related to the first issue, some agents have been hit by the shortage of inputs for resale. During the 1998/1999 season, for example, fertiliser was in short supply because the manufacturers cut back production on the basis of a possible drought warning (which did not materialise). The supply chain for fertiliser, is further complicated by the fact that the manufacturers also act as wholesalers and, in some cases, retailers. This anomaly can sometimes create price competition for rura