Top 5 Procurement Challenges and Their Solutions

How many procurement challenges do you face in your day-to-day job? Can you say which ones are the biggest challenges for your procurement business?

For me the biggest procurement challenges are no more just limited to ensuring reduced price and timely delivery of goods. Those are beyond them and include the increasingly complex landscape dominated by legal issues, sustainability concerns, and regulatory and ethical considerations that tend to affect not only a company’s revenue but also brand standing.

In view of this scenario, the future of procurement and supply chain management calls for procurement leaders and associates to be prepared to deliver beyond the expected. They now have to role-play advocates and guardians for their businesses and to acknowledge 5 major procurement challenges mentioned below, which are set to disrupt the current ecosystem. They can navigate through all those challenges if they prepare themselves now for the brighter time ahead.

Managing Risk:

Every business process tends to encounter procurement challenges. However, managing them efficiently is where the actual struggle lies. Managing risk efficiently, therefore, becomes a key concern for the department. With most companies looking at business expansion, implementation of strategic roles through skilled leadership deployment into the process is the way to go.

Plus, the implementation of strategies like risk-analysis of each supplier, such as obtaining competition data and keeping backup plans in place, in case of things not working out as planned, is quite essential now.

Globalization Impacts:

We’ve been witness to several technological progresses, which are beneficial in overcoming certain communication challenges that are the result of globalization. Today, e-procurement systems have become an aid in standardizing procurement processes and with real-time data updation, retrieval of reports from anywhere in the world has become easier. As it helps in fostering collaborations globally, it also has become necessary for companies to evolve and adopt the technology landscape. Unless doing so, it will be difficult for companies to be able to establish any amount of regional control as they are unable to control costs centrally.

Complexities Surrounding Supply-Chain Process:

Companies worldwide want to create a sustainable procurement process and reduce supply-chain complexities when it comes to direct procurement. But, when it is indirect procurement, there is too much extra time and labor required to audit indirect procurement processes and ensure sustainability.

Imagine having to ask your suppliers to conduct surveys and then pursue through them all, to provide you with an actionable business plan that can be implemented – doesn’t it sound like a resource-driven nightmare? This is the reason, businesses are now issuing standard written codes of conduct to implement in the supply-chain process and that helps them reduce complexities to a great extent.

Controlling Unmanaged Expenses:

The most vexing procurement challenge that companies face these days pertain to cost reduction and controlling spend-tail. The only way to deal with it is preparing your procurement teams diligently. It implies sincerity and perseverance when anyone seeks quotes, selection of proposals and suppliers and, of course, the overall management of the procurement process. It’s related with unmanaged spend and opportunities to save time and money.

Maintaining Accuracy in Reporting and Analysis:

Big Data is a blessing for businesses. However, it becomes exceedingly difficult for many too to leverage the full potential. If your data in reports is not accurate, be ready to incur heavy losses. So, having the right business intelligence tools is imperative to overcome procurement challenges pertaining to the accuracy of reporting and being able to factually determine the success and failure of a procurement process.

To Conclude:

None of the above suggested solutions to the procurement challenges can be fulfilled without a dynamic people resource. You will need your people as prepared to to deal with those procurement challenges with progressive mindsets, dynamic capabilities, and holistic approach that would contribute toward an advanced supply chain.

Need Some Expert Advice?

Contact procurement and supply chain management training experts at Promise Training & Consultancy, who can explain to you why efficient and trained leadership can handle those challenges successfully.