Organizations have realized the benefits of having a robust procurement strategy in place. But understanding the strategic process of each stage and finding a way to implement it throughout the functional units of business can be challenging.
Fremont, CA: Procurement leaders are required to handle different responsibilities such as needs identification, vendor management, and payment processing. And this task of identifying and managing the difficulties can be beneficial as procurement impacts an organization’s bottom line.
Here are six business challenges in procurement:
Inaccurate data
Organizations need precise and reliable data to make informed procurement decisions. Purchases based on incorrect procurement data can result in inventory shortages, excess inventory, and other challenges that directly influence an organization’s bottom line.
Dark purchasing
Dark purchasing are those purchases made beyond the defined procurement process. This uncontrolled spending can be expensive for businesses. Items procured that cannot be justified using capital outlay, or material inventory can lead to loss of revenue and control, making it more challenging for organizations to manage.
Supplier-related issues
Another issue in procurement is supplier management. From identifying the appropriate supplier to monitoring vendor performance and assure a consistent supply of quality products, the entire process is complicated.
Risk mitigation
Supply risks such as market risks, potential frauds, costs, quality, and delivery risks are some common types of risks. Compliance risk like policy adherence, anti-corruption, among others, also adds to the difficulty in procurement.
Strategic procurement
Organizations have realized the advantages of having a robust procurement strategy in place. But understanding the strategic process of each stage and finding a way to implement it throughout the functional units of business can be challenging.
Long process cycle
Products and services bought at the last minute result in longer lead times and procurement cycles than expected.
