5 Key Challenges in Sourcing & How to Manage Them with Procurement

by Procurement Freelancers Team

Amid growing uncertainty, business organisations need to prepare accordingly to adapt to the new normal. For many businesses, sourcing is still a key challenge. Sudden and unpredictable changes in demand for products and services may make sourcing complicated and lead to inefficiency. However, modern businesses prefer to handle sourcing complications with the help of certified procurement professionals.

Without a doubt, sourcing is a critical function in any business. It effectively involves identifying, selecting, and acquiring tools, goods, and services from reliable suppliers. Effective sourcing can ensure high-quality products and cost-effectiveness, which directly impact a company’s bottom line. The sourcing process comes with its own set of challenges. Today, this blog will share some key challenges in sourcing management and how to manage them effectively via procurement strategies.

How Can You Manage Sourcing Challenges Via Procurement?

Organisations should have access to innovative procurement strategies to overcome common sourcing challenges. Some of those challenges and solutions include:

Supply Chain Disruptions

The prevalence of supply chain disruptions is one of the major sourcing concerns. Many factors, including natural disasters, geopolitical conflicts, economic crises, and even unforeseen occurrences like the COVID-19 pandemic, can lead to such disruptions. These disruptions may cause delays in the supply of goods and services, which may have an impact on customer satisfaction and production schedules.

Expanding the supplier base is an effective way for procurement consultants to deal with supply chain interruptions. To reduce dependency on a single source, it’s crucial to collaborate with several providers in targeted geographic areas. Moreover, the use of advanced procurement technology and data analytics can help in the early detection of disruptions and ensure workable alternative sources.

Cost Management

Cost management is always a perennial challenge in sourcing. Here, balancing cost-effectiveness with the need for quality and reliability can be a daunting task. Most suppliers have their own cost structures, and that’s why price negotiations become challenging, especially if it’s about a competitive market.

According to experts, value-based sourcing can be an effective solution here. This approach considers the purchase price and total cost of ownership and analyses long-term partnership benefits. Apart from this, negotiation skills and long-term relationships with suppliers can also help with cost savings without compromising on quality.

Supplier Qualification & Risk Management

Selecting the right suppliers and handling supplier risk are significant challenges in sourcing. Improper supplier selection can lead to quality issues, cause delays in deliveries, and even mess with your reputation.

Procurement can solve such challenges by implementing a comprehensive supplier qualification process. The qualification-checking process should include assessing a supplier’s financial stability, quality control, production capabilities, and compliance with ethical and environmental standards. Moreover, regular monitoring and proper supplier audits can reduce the risks associated with supplier performance.

Inventory Management

One of the most important aspects of sourcing is inventory optimisation. While keeping excessive inventory requires resources, having too little inventory might result in stockouts and lost sales opportunities. Resolving these conflicts can be a challenging task.

Procurement may employ demand forecasting techniques and just-in-time (JIT) inventory systems to efficiently manage inventory. These methods can effectively help in lowering excess inventory and ensuring an appropriate amount of stock is available when required.

Sustainability and Ethical Sourcing

In response to environmental and social concerns, businesses now need to focus more on sustainable and ethical sourcing. Ethical sourcing isn’t only a social obligation but also a business imperative. Modern customers are also conscious of society and the environment, and as a result, they also demand eco-friendly and ethical products.

Procurement consultants can handle this challenge easily by including sustainability and ethical sourcing criteria in the supplier selection process. It is better to work with suppliers who maintain sustainable practices and ethical labour standards. Working with such suppliers can meet your special requirements as well as enhance your company’s reputation.

These are some key sourcing challenges that many businesses experience, irrespective of their size and genre. Hiring the right procurement partner can help in the early detection of such problems and ensure smooth operation.


The success of a business heavily depends on its ability to perform the intricate and vital task of sourcing. Although there are a number of challenges involved, procurement strategies can help efficiently manage these challenges. Procurement professionals confront many challenges, including supply chain disruptions, cost control, supplier qualification, inventory management, and sustainability issues.

Businesses can more effectively navigate the challenges of sourcing and ensure the timely and cost-effective acquisition of goods and services by expanding their supplier bases, focusing on value-based sourcing, enabling strong supplier qualification procedures, improving inventory management, and putting a strong emphasis on sustainability and ethical sourcing. Apart from this, they can seek the help of certified procurement professionals. Procurement Freelancers is an advanced global freelancers’ marketplace where businesses can hire experts to get tailored procurement support. It’s extremely easy and takes only a few minutes to post requirements on this platform and hire expert professionals with Procurement Freelancers.

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