Five Biggest Challenges Faced by Sourcing and Procurement Professionals


Sourcing and procurement are becoming increasingly difficult as supply chains continue the trend of globalisation and become specialised. Consumers demand innovative products at a reasonable cost and at the right time, and businesses have to accommodate accordingly to survive. While it does allow companies to explore foreign markets and reach new consumers, it disrupts how manufacturers need to operate.

In effect, tasks like risk identification, payment processing, and maintaining vendor relations are becoming challenging for procurement experts with each passing day.

Here are some of the biggest challenges that the sourcing and procurement department must overcome to smoothen operations and increase efficiency.

Challenges faced by sourcing and procurement professionals

1. Supply chain transparency

One of the most challenging obstacles for sourcing subcontractors and leaders is transparency across different departments. There’s usually a ton of critical information that all teams in your company require access to, for example, contingency plans, unavailable leads, etc.

When critical data are missing from the supply chain, your business can run into several types of errors, including delayed delivery, overspending, and downtime. For maximum efficiency, your suppliers or subcontractors need to have real-time visibility into your existing inventory and should know the quality requirements and budget extensively.

2. Risk management

Supply chains, especially global ones, face several risks that can hamper a business’s activities. The most common ones include quality compromises, market risks, delivery, and cost and payment. In addition, there can be other risks, including anti-corruption compliance and policy compliance which can add to the woes of your sourcing team.

Procurement experts have to conduct thorough market research to identify suppliers that best match the requirements. Moreover, they also have to keep a close eye on the supply chain to ensure that quality standards and delivery timelines are met. Risk management and mitigation, if overlooked, can significantly affect the bottom line.

3. Spending control or dark purchasing

More often than not, purchased products are not updated in real-time in the inventory and financial records. While a small delay may not affect the process much, longer waits and information mismatch can end up complicating the procurement strategy, supply management, and financial audits, leading to overspending.

Uncontrolled expenditure is one of the toughest challenges that businesses need to overcome to control the loss of revenue. When the material outlay cannot justify inventory purchases, the resulting loss of spending control can be extremely hard to tackle for organisations of all sizes.

4. Data inaccuracy and software problems

While automation is taking care of data processing, several companies still rely on manual labour for data entry. While this is primarily because these data management programs are not cross-compatible, manually entering data can lead to human errors from time to time. A direct result of this is inventory stagnation, delayed workflow approval, and other supplementary challenges that directly hamper the organisation’s bottom line.

Not using procurement software leads to negligence, lack of analysis, and potential fraud. Effective software must be used to analyse the cost-benefit ratio, control budget and spending, better transparency, and effective decision-making to ensure smooth workflow at all stages of procurement.

5. Agility in strategic procurement

This goes without saying that procurement processes are continuously becoming strategic and global. So, understanding the strategic implications at each step and implementing the same on a functional basis is a significant challenge for sourcing subcontractors and procurement professionals.

Supply chain disruptions last year forced procurement professionals to adapt to the rapid change. When outside consultants or just one department is in charge of adjusting crucial parameters, even a small change can become a major crisis.

Instead, people closest to the line of work need to possess the tools to make the necessary changes themselves. In addition, they need to be proficient in collecting supplier data, tracking product quality control, managing workflows, and reporting data to all departments in real-time.

Successful businesses will need to show tremendous resilience to maintain a positive approach to work and overcome hardships induced during a disruption to normal workflow. While professionals face several procurement challenges daily, many of these obstacles can be solved with the right tools and incorporating technological advancements. One popular trend is the automation of procurement processes. Automating tasks decrease human errors and increase productivity while your team can focus on strategic concerns.

Read: 5 Basic Procurement Problems: How to Reduce Inefficiency and Fraud 

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