
Common Challenges Faced by the Procurement Industry
Sometimes, purchases are made outside the conventional defined procurement process. These fall under the category of dark purchases. Controlled spending can prove costly for a business in the long run.
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CIO Applications Europe | Monday, August 31, 2020

Sometimes, purchases are made outside the conventional defined procurement process. These fall under the category of dark purchases. Controlled spending can prove costly for a business in the long run.
Fremont, CA: Procurement leaders are often tasked with multiple responsibilities like needs identification, vendor management, and payment processing. There are always ample tasks to be managed in the procurement department of every company. The primary concern for procurement managers is to manage organizational spending while enforcing proper procurement policies. However, this is just the tip of the iceberg of all problems faced by procurement managers.
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The procurement landscape involves several activities like the purchase order process, purchase requisition management, contract management, supplier lifecycle management, and more. Amidst all the chaos, procurement managers often lack time to tackle the common challenges faced in the industry.
Here are some of the common challenges faced by procurement managers.
Risk Mitigation
Supply risk has always been a significant challenge in the procurement process. Market risks, quality, cost, potential fraud, and delivery risks constitute the most common risks. Also, compliance risks like policy adherence, anti-corruption, and more keep your procurement leaders up all night.
Dark Purchasing
Sometimes, purchases are made outside the conventional defined procurement process. These fall under the category of dark purchases. Controlled spending can prove costly for a business in the long run. When items purchased cannot be justified using capital outlay or material inventory, the resulting loss of revenue and control poses a significant challenge for organizations of all sizes.
Long Process Cycle
In most cases, products and services are procured in the sense of urgency at the very last minute. As a result, the actual lead times and the procurement cycle tend to be considerably longer than anticipated or scheduled. This delay in the procurement process is mainly caused by overlooking the procurement schedule, extending the timeline to submit bids, and failing to start the evaluation process.
Inaccurate Data
Organizations today are highly dependent on data, which holds true for all departments, including the procurement section. Procurement managers leverage data to make well-informed decisions. This means the data accessed by procurement managers should be accurate and reliable. Making purchases based on inaccurate procurement data can lead to excess inventory, inventory shortages, and various other procurement challenges that have the potential to make a direct impact on an organization’s bottom line.
See also: Top Enterprise Risk Management Consulting/ Services Companies
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