Common Challenges Faced in Traditional Procurement Processes

Every sale and transaction that a business deals with daily can transform the business’s future. This makes the development of a procurement strategy a must to have better business and purchasing processes. 

What is procurement? 
Procurement is the obtaining of the best products and services at the best possible price in a series of steps that are important for any organization or business. 

Traditional procurement is identified by manual events like calling the vendors and buyers, approvals, writing RFX’s, negotiations, etc. that include repetitive and small tasks. However, these processes are not very efficient or accurate and thus require many follow-ups.  

Challenges in procurement and their solutions-
With an understanding of the best features, policies, and benefits while abiding by social and corporate responsibilities, one needs to understand the prevalent challenges in procurement. 

Procurement processes are riddled with challenges and difficulties and the leaders have an array of responsibilities to handle. These challenges are based on the organization’s line of work, size, etc, however, some of the common challenges and the ways to overcome them are, 

1.  Risk mitigation - 
Risks are involved in every aspect of the business and supply risks, market risks, frauds, cost, quality, etc, comprise the most common risks that are involved in the procurement process. Additionally, risks like anti-corruption and policy adherence are also involved. 

These risks can be fatal for the complete cycle of the supply chain process and thus it becomes significant to understand these risks. 

Active and extensive information search, substantial conflict and political bargaining, preference for formal decision rules, emphasis on strong buyer relationships, and established and enhanced communication networks can help mitigate the risks involved. 

2.  Lack of understanding supplier capabilities before purchase - 
Finding the right supplier that understands the importance of quality and delivers in time can keep any dissatisfaction related to the procurement processes away. Having high expectations from a supplier for the completion of a procurement deal beyond their capabilities can be disastrous in the end. 

The best solution to this is regular monitoring of records management. Supplier performance can be monitored by ensuring that delivery demands and standards are met. A good supplier relationship is important for the smooth functioning of the procurement process. 

Holding a regular supply review, discussing key performance KPI, and agreeing on improvement and action ideas can also help overcome this challenge. 

3.  Lack of transparency and trust - 
Withholding of important information by the organizations tends to create procurement problems as it limits the suppliers from offering the best and jam-packed deals to the clients. Also, organizations usually keep the suppliers at arm’s length and this treatment is similar to the one filled with zero confidence. 

To avoid these, ask for supplier’s demands and details in advance to offer quality services. Also, keep a request line open to ensure that any updates and changes about these can be included. Having some trust towards your key suppliers can yield your problem-solving methods and give positive improvements. 

4.  Inaccurate data - 
Inaccurate data can lead to ill-informed or bad decisions which can ultimately reflect as loss in the business cycle. Access to accurate data is important as it helps to put up a strong front in the front of management or the decision makers and it helps slim the chance of being unsuccessful. 

The only solution to this is to make purchases and related decisions based on accurate and reliable data. 

These challenges in procurement hinder the growth of the business and create room for financial and operational losses. However, procurement should be a strategic and insightful process rather than based on instincts. 

Procurement is the entire process of sourcing, negotiating, imperative and strategic selections, and many other steps. The implementation of the best procurement processes will help seek a comprehensive approach and integrate different measures and high-performance processes to solve these problems. 

EffyBuy is one such tool that helps to carry out the systematic procurement process with risk calculations and insights. This in-depth tool helps achieve your business goals with analyzed and researched resources and solutions. It provides a unified platform for controlling numerous procurement functions and also enables automated document management generation. The appropriate use of this tool will help your business stay ahead of the competition and meet your procurement goals.