A trustworthy procurement system is one set up to enhance accuracy, efficiency, and speed. So, there is a need for regulating business processes within procurement by guaranteeing best practices indispensable to the whole business plan.
Procurement complications extending from administrative incompetence to human mistake can bring adverse outcomes to the business procurement and purchasing competence.
The most common Procurement problems and their solution:
1. Vague procurement specifications and requirements – Implement a previous-defined requirements procedure for a more beneficial scenario for both your suppliers and yourselves.
2. No previous supplier evaluation before doing business – A lack of trust on any side or point on the deal would bring Procurement misinterpretations. Run detailed supplier evaluation before selecting any potential-strategic business partner.
3. High expectations beyond suppliers’ skills in procurement deals brings terrible outcomes. So, verify you meet all delivery demands and standards; carry out a routine analysis, examine Key Performance Indicators (KPI) and design a contract on proceedings.
4. Not agreeing on important KPI – Best practice such as variety, velocity, visibility, and volume are essential in SCs. Once settled, KPI’s must be the main outline for regular supply review; employ measures that offer a sense of balance.
5. Lack of transparency – Refusing to share crucial information creates Procurement problems, impacting your relationship with stakeholders. Offer quality services and keep an updated request-line open. Sharing is crucial.
6. Accepting poor quality for lower costs – Cost is still of significant importance for consumers products. However, you might implement a consumer’s feedback to better balance quality risk towards an acceptable profit margin.
7. No trust in your key suppliers. Now, show them some confidence to enhance a supportive relationship that boosts problem-solving approaches that come out to greater-productive progress.
8. Not counting on engaging-development plans for Procurement and buyers’ teams always to upgrade functionality. Enhancing technical know-how is vital; however, when funds are limited, Procurement resources such as books, blogs, and more, could take forward the maturity of the Procurement function.
9. More than 40% of supplier work without a formal-legal contract. Even though legal contracts and paper works might be time-consuming, implement straight, fair, and legal agreements, no matter how small or big the supplier could be.
10. Procurement function processes are not transparent. Procedures such as training and development or P2P, if not implemented correctly, result in confusions. Put into operation procurement systems and values that put a well-defined business process forwards.
11. Accidental orders, if no protocol supports them, it could leave you unprotected or with no possibility of reversal against mistakes. An active connection with suppliers triggers an urgent tracking to correct errors, saves time, avoiding significant troubles in the long-run.
12. Still working with non-flexible suppliers – find room for negotiating with your suppliers the best costs. What deal options would be beneficial to your business? Suppliers who have room for your business requirements make the most out of the performance.
13. Not sure about which supplier to develop or to replace – be careful when replacing or developing the right supplier for your business. Give them the necessary support and service, research the specific supplier’s motivation to enrol in products, technology or product development programs.
14. Keep focusing only on cost reduction – Running your business under budget might arise problems. For instance, outsourcing to low-cost countries could impact the whole of SC. So, consider the possible-resulting implication and select a supplier whose price offered meet your organisation demands and overall consumer’s satisfaction.
15. Making purchase orders based on inaccurate Procurement data could result in excess or shortage of inventory, and other supplementary Procurement processes, to directly affect your organisation result; put together only precise and trustworthy data.
Further comments: Be alert about your possible risk outcomes, and put into action measures to tackle all unnecessary risk. The implementation of Procurement best-practices should integrate different standards and high-performance business processes to work out these problems.
This article was originally published on the Prophetic Technology blog.