February 27th, 2019 • Procurement Process
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
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.
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.
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:
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.
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.
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.
Outdated procurement tools like spreadsheets, legacy systems, and more are nearly extinct. And, automated procurement tools have proven themselves to be efficient and effective to solve challenges in the procurement process.
Procurement systems help businesses create and maintain a supplier network effortlessly with improved visibility and collaboration. With a centralized database to collect all vendor-related information, organizations can spot process gaps, shorten procure-to-pay cycle, reduce costs, and measure vendor performance with little to no human intervention.
The inbuilt reporting module gives an accurate view of the complete process at any time and speeds up decision making. 360-degree visibility and audit trails keep the procurement process transparent and reduce maverick spend. By automating procurement policy enforcement, organizations can eliminate potential risks and compliance issues.
As the market and technology continue to evolve, new procurement challenges are on the rise. It is important to know common challenges in the procurement process so that organizations can put the right policies and procedures in place to tackle them.
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. Procurement automation tools like KiSSFLOW
can help organizations streamline their procurement process and steer it towards sustainable success.
Take a look at KiSSFLOW and see how it can power up your procurement process!
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