Procurement is not an easy process. It can be difficult for many companies, including equipment and product manufacturers. Whether your organization is small with one or no dedicated procurement representative, or large with a full team, you will face problems that may be unavoidable. We have collected 6 of the more common procurement issues and supplier relationship issues. Read on to learn more about these problems, including ways to overcome them.
Collect Accurate Spending Data
Like other business processes, procurement is more effective when supported by data. This data can help you and your team make informed decisions about supply chain management, and allows you to communicate your procurement needs with senior management and others who may not be directly involved but influence the procurement process.
However, it can be challenging to ensure that the procurement data you get is accurate and consistent. Fees are not submitted correctly by those involved; different data are provided by different suppliers and other obstacles arise.
Implementation consistency and well-defined but easy-to-track processes give a hand in addressing these issues. Improving supplier relationships and clearly communicating data needs can help too.
Sometimes supply chain management suffers from information overload. In the modern business world, we are exposed to a lot of data, sometimes too much. This may lead to errors and delays.
In other words, the key to effective procurement is making sure you have the right amount of accurate data on hand. The best way to deal with this is to make sure the precision tools you need are readily available at your fingertips. For many teams, collecting large amounts of data and processing them with overviews is the most efficient solution.
When it comes to physical inventories, visual alerts and trackers like asset tags can help with accurate data collection. Knowing stock levels and stock locations is useful if you need to know which products and how much to order. Asset tags use barcode and QR code technology to monitor and track resources in real time. Creating custom asset tags for equipment and products is a great way to provide daily intelligence about supplies.
Dark purchasing refers to the purchasing cost made outside of standardized procurement processes. It may occur because people with purchasing authority have not properly submitted expenses. This can also happen if someone deliberately conceals what was purchased. In either case, maintaining spend visibility is key to avoiding dark purchases.
It helps ensure that the official procurement process is relatively simple. Try to simplify the process of getting things right the first time, rather than having to go back and fix the problem later. Many people outside of supply chain management do not understand the importance of good procurement procedures.
If the procurement process involving a certain supplier is long, it can be difficult to ensure that supplies arrive on time. They need to order supplies in bulk before demand arises. This is acceptable for regular purchases, but often less practical. Many supplies were ordered in a state of emergency and could not wait for a long lead and shipping time.
Try working with the supplier to see if it is possible to shorten the turnaround time. Depending on the product purchased, you may be able to arrange for temporary rush orders to be granted. However, if the arrangement is not satisfactory, the best way may be to find other suppliers.
Supply risk can be a difficult challenge to overcome in the procurement process. Changes in the economy can disrupt supply chains, potentially leading to fraud and unexpected changes in pricing, volumes or delivery times.
In addition, compliance is often a major consideration for project materials. If you need supplies that meet regulatory requirements or quality requirements, you cannot risk working with a supplier who cannot guarantee compliance. Building long-term supplier relationships based on trust helps achieve this, as does selecting a joint supplier to support the most trusted suppliers. It is very difficult to eliminate risk in procurement, but it may be helpful to work with a supplier you know or who has been recommended by others.
Sometimes you experience unexpected delays in your supply chain. Maybe an item is out of stock or lost in transit. Many problems cannot be planned or foreseen, but you can be prepared for problems that may arise.
Again, one of the best solutions to this problem is to maintain a good relationship with the supplier. This helps you understand and resolve issues like out-of-stock faster. Also, the more you communicate with your suppliers, the less likely you will have problems due to misunderstandings. The right supplier can make a big difference in dealing with these unexpected delays.
In addition to solving the problems mentioned in the "Challenge" section above, 8Manage e-Procurement will ultimately help companies maximize profits. This is achieved by balancing cost reduction, supplier quality, supply assurance and increasingly open supplier innovation. Success means building a competitive advantage, and failure means being at a disadvantage.
The manufacturing and supply chain environment has become increasingly complex, and electronic procurement has become growingly strategic for light manufacturing companies looking for new ways to optimize their supply chain.
8Manage e-Procurement helps organizations become "preferred customers" for suppliers, helping manufacturers drive innovation and bring products to market faster at higher profits. For example, if a manufacturing and automotive customer has a comprehensive procurement process and uses it to facilitate deep collaboration with suppliers, following best practices for new product introductions, this customer will bring new innovations to the market at a much faster rate. If this is a repeatable process, procurement can have a huge impact on driving business growth, with an eye toward managing compliance and reducing overall supply chain risk.
8Manage e-Procurement helps light industrial manufacturers better manage supplier engagement in the product lifecycle. In an ever-changing regulatory environment, light manufacturing companies need new ways to guide internal and external collaboration with suppliers and partners to innovate faster.
Technology is critical to making these collaborations more efficient and scalable as companies work with more and more suppliers to produce more product lines. This is especially important for businesses producing complex products, which regularly work with multiple suppliers from around the world.
Supplier management is at the heart of how companies bring visibility into all aspects of supplier relationships. Supplier management is first and foremost accurate information about suppliers and information visibility to internal stakeholders, which should be leveraged in strategic sourcing, procurement and operational processes.
The ease of doing business will also drive supplier innovation. For example, manufacturing companies need easy and convenient access to working capital, and startups can drive this process. Supplier development with clear partner goals and performance metrics will foster collaboration and innovation.
8Manage e-Procurement drives efficiency and automation, which in turn builds innovation and improves strategy. It also enables you to turn your best ideas into reality. For example, you work with a component manufacturer to configure a unique approach to new product introductions that supports expanded collaboration, ultimately bringing more innovative products to market faster. This helps improve margins and revenue, accelerate time-to-market, and reduce risk as well as improve performance and ensure product consistency.