Procurement is a constantly evolving & undervalued operation that impacts every facet of an organisation. This evolution means that the function’s success is no longer just about sourcing services and reducing cost. Nowadays, procurement teams face an increasing number of complex challenges. The obstacles that come with it are an inherent part and parcel of every business process.
Outlined below are a few of the challenges currently influencing procurement today.
Reducing Costs & Achieving Savings
The primary procurement mandate is to lower costs. Depending on the industry, the costs of products, materials, and transportation are constantly fluctuating. On the other side, demand and value are also changing. Keeping all of this under control to meet the desired profit is a big challenge in most procurement processes. It can be difficult to try and lower costs through negotiation alone. It can also be huge procurement challenge if you’re past the point of increasing your economies of scale. Going back to review your operational flow and min/max levels and adjusting them can help to continue to reduce cost and achieve greater cost savings.
Talent Gap
The Hays Ireland Salary & Recruiting Trends 2018 guide present a worrying picture of the skills gap within procurement, with 58% of employers confessing they have experience moderate skills shortages over the last year. 20% of employers went even further saying they experienced extreme shortages. With many procurement functions transitioning from a tactical to a strategic function, in order to improve processes and drive better cost efficiencies, a gap in skills has the very real potential to hamper these plans. This is the first step in closing the gap is to recognise there is one. A problem identified is a problem rectified. Realign the business goals if necessary so they align with the team. Create an environment that supports highly skilled and knowledgeable professionals, so it rewards their development and encourages it.
Accurate Data & Reporting Issues
As the buzz continues to grow about Big Data procurement, it may become difficult to keep up with management expectations to provide good data if it doesn’t have access to good reporting and analysis tools. The procurement process is becoming more automated. There are often a number of individual platforms and programs used to manage the process. Good business intelligence is crucial to help procurement understand how and why it is being successful and where it is failing. If an organisation relies largely on manual processes, then it may not be able to trust the data it has access to. Challenges with data accuracy are commonplace in many procurement departments. Consider updating software to help bridge these gaps, whether they be for spend analysis, benchmarking, or market research.