Top 6 Procurement Challenges that Haunt Your Business
Procurement leaders wear multiple hats and manage an array of responsibilities—from needs identification to vendor management and payment processing. A day in the procurement department is never slow.
Managing organizational spend while enforcing proper procurement policies is always a constant concern for procurement leaders. What’s worse is that these problems just scratch the tip of the procurement challenge iceberg.
The procurement landscape is inundated with a number of activities like purchase requisition management, purchase order process, contract management, supplier lifecycle management, and a lot more. Amid the chaos, procurement leaders don’t often have enough time to tackle common challenges in procurement.
Here are six common procurement challenges that haunt businesses of all sizes
1. Risk mitigation
Supply risk is always a major challenge in the procurement process. Market risks, potential frauds, cost, quality, and delivery risks constitute the most common type of risks. Additionally, compliance risks like anti-corruption, policy adherence, and more keep your procurement leaders up all night.
2. Dark purchasing
Purchases that are made outside the defined procurement process fall under dark purchasing. Such uncontrolled spending can ultimately be expensive for businesses. When items purchased cannot be justified using capital outlay or material inventory, the resulting loss of revenue and control is a significant challenge for organizations of all sizes to tackle.
3. Long process cycle
Most often, products and services are procured with a sense of urgency in the last minute. As a result, the actual lead times and the procurement cycle tends to be considerably longer than that anticipated or scheduled. Listed below are the common reasons for delays in the procurement process:
- Delays in preparing technical specifications/TOR/SOW
- Overlooking the procurement schedule
- Extending the timeline to submit bids/proposals
- Failure to start the evaluation process on time
- Setbacks in contract negotiation
4. Inaccurate data
In order to make sound procurement decisions, organizations need accurate and reliable data. Making purchases based on inaccurate procurement data can lead to inventory shortages, excess inventory, and other additional procurement challenges that have the potential to impact an organization’s bottom line directly.
5. Strategic procurement
As the procurement process continues to become more strategic and collaborative, organizations are starting to realize the benefits of having a solid procurement strategy in place. However, understanding the strategic implications of every step and figuring out a way to implement it across all functional units of business is a distinct challenge.
6. Supplier-related issues
One of the greatest challenges in procurement is supplier management. From identifying the right supplier to keeping track of vendor performance and ensuring a stable supply of quality products, the whole process is filled with complications.
The Pandemic Crisis Management Handbook for Procurement Managers
How procure-to-pay software helps solve these challenges
Procure-to-pay software like Kissflow Procurement Cloud can reduce risks, processing time, and overall cost freeing up the procurement team to focus more on human-centric tasks. Irrespective of an organization’s size, it enables businesses to buy smarter, streamlines their purchase-to-pay cycle, and manage supplier relationships better.
It enables businesses to quickly spot and assess new suppliers, rapidly onboard them, and gain a 360-degree view of all supplier-related data including performance and risk in a single platform. Businesses can automate all or part of their source-to-pay process, regardless of their backend ERP, purchasing, or accounting systems.
Employees get a fast, consumer shopping experience while businesses get more control and visibility over spend. You can eliminate guesswork and make better, faster, and more informed purchasing decisions. It provides complete spend visibility, rule-based processes, on-demand supplier credentials, automated processes, and data-driven insights.
Streamline Your Procurement Process With Kissflow
Face your challenges with the right tool
As the market and technology continue to evolve, new procurement challenges are on the rise. Understanding the complexities in the procure-to-pay process, vendor management, and contract management will help businesses stay ahead of the competition and meet their procurement goals.
Are procurement challenges holding your business back? If any of these six common challenges in procurement looks familiar, it may be time to consider upgrading your procurement system. A comprehensive procurement tool like Kissflow Procurement Cloud can help organizations streamline their procurement process and steer it towards sustainable success.
Take a look at Kissflow Procurement Cloud today and see how it can power up your procurement processes!