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.
This makes a procurement manager’s job riddled with challenges and difficulties. It also means that identifying and overcoming procurement challenges is time, money, and effort well spent since procurement has a direct impact on an organization’s bottom line. While procurement challenges can vary based on an organization’s size, line of business, etc., 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. Lack of transparency
Spreadsheets were a terrific place to start when it came to organizing data, but when you need a lot more out of them, they start to fall apart. The first issue you may encounter is data access. It can be tough to locate information and track it across several spreadsheets. The speed with which you can access information diminishes as the volume of data grows. You must also deal with security risks and avoid disclosing too much information to too many people. Small mistakes and omissions can result in incorrect data, costing you deals, clients, and vendor relationships.
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. Failure to adopt technology
Managing your procurement processes manually may appear simple at first, but as processes become more complex, they become the largest roadblocks to success. This is why one of the procurement challenges is to see technology as a helpful hand, a partner who helps a company create value. To achieve future goals, becoming an expert in how digital procurement solutions can decrease costs and foster innovation is critical.
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.
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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 software 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!