Challenges Involved in Procurement Process and Ways to Manage
Today's competitive and quickly changing world, a procurement manager is facing many challenges in the end-to-end procurement process. Procurement analysts have to focus on the increasing challenges as the procurement services are expanding within the organizations.
So, organizations have to focus on leveraging the procurement process by implementing a new procurement strategy which includes a simple chain management with increased no of point of contacts to avoid the errors in the process.
In addition to cost reduction and procurement services delivery, procurement managers should focus on making the process error free. As the role of procurement within the organizations is increasing on a fast pace, there are many challenges involved in a successful procurement process which the procurement companies must focus and manage:
One of the biggest procurement challenges is the Vendor selection. It is not only difficult to find qualitative suppliers, but it is equally important to qualify them with the most rigorous procurement process. A vendor should be selected keeping their level of flexibility in mind to maintain a long-term relationship.
Vendors should understand your business needs and their role in driving your business into profits. So before selecting a low-cost vendor it is better to check for other negotiable options that you have.
After successful selection of vendor comes the tricky and difficult part, the vendor management, it is the responsibility of the procurement manager to create open lines of communication between the vendors and companies to drive them into the lines of profitability.
Procurement Savings and Cost Reduction
The widespread problem between the buyers and procurement departments is the cost reduction. While negotiating with your vendors, you must focus on cost reduction in order to achieve high procurement savings.
Before going for the final approval, review the following
How many orders are placed accidently on a monthly or quarterly basis?
Is your order timing correct? How often an order is rushed and paid extra to retain your vendors in the warehouse?
Going back to procure to pay process flow and revising the above-mentioned prerequisites can help you save more money and thereby lead to great procurement savings.
Risks play a vital role in influencing a procurement and supply management. Risks are calculated based on the financial status of the supplier and the consistency in the industry policies. It is equally important to engage with your tier two suppliers along with the tier one suppliers to ensure that the necessary obligations are transferred to the subcontractors too.
Accurate Data Reporting
With the increase in Big Data and AI, procurement managers should focus on implementing the tools that helps in getting most accurate data. Inaccurate data is a very big flaw as it influences many buyers and greatly impact your business.
Organizations relying on the manual procurement solutions will not be able to trust the data that is used. Consider upgrading the process and implementing procurement best practices like using e procurement services for online data analysis and reporting.
The best approach to organize the centers of excellence structure and work responsibilities is to focus on moving towards a centralized procurement management. A complete e procurement solution is required which works beyond the capabilities of MS Excel and provides a centralized procurement approach for recording the center of excellence activities.
A key approach to overcome all the above-mentioned challenges is automation of procurement process using eProcurement services. This approach links the buyers and sellers into one single and easy purchasing platform. E procurement services play a crucial role in time saving as they automate the lengthy and repetitive operations associated with procurement manager approval, contracting, negotiation, and discussion.
EProcurement services enable the different departments to record every minute change or development they have done and ensure the data accuracy. They also improve the procurement process visibility by consolidating users, procurement managers and suppliers onto one single procurement platform. It also ensures a simple approach for an end-to end audit trail using a complete online procurement process to provide valuable information and resolve the situation quickly and secure a win. This approach helps your organization to stay in the list of best procurement companies to work for and drives you towards maximum profitability.