Some of Your Most Common Procurement Issues Solved with Tech

We recently came across an infographic which outlines some of the most common (and challenging) issues that a procurement organisation can face and where technology and automation can be the answer. Well defined procurement processes are of course the backbone of streamlined, efficient and cost-effective procurement, and without them the function will incur loss of time and resource. But many of the issues faced by procurement organisations are the result of ill designed or inefficient processes, so the ideal is to optimise those processes by using more efficient practices, and, as this infographic suggests, using tech and automation to minimise human error and risk.

As a firm that evaluates and ranks procurement tech vendors, we were interested in the store this infographic gives to technology. The creator, Michael Higgins, Founder & CEO of PurchaseControl, outlines the types of issues faced by procurement and where technology can help.

Some of the most prominent procurement issues include:

  1. Inability to reduce the costs of services and materials. This can lead to an increased cost of your final product. By controlling the costs of these items, you can reduce the price for the end consumers as well.
  2. Supplier lead times can be a big issue. Longer lead times mean you might not be able to streamline your production flow.
  3. You might not be able to check if the materials that are being procured are of a high, or the right, quality.
  4. Seamless communication with suppliers and internally is necessary to procure high-quality materials and maintain a streamlined flow. However, if this isn’t done well, it can result in miscommunication between departments, valuable data can be lost, payments can be duplicated and lack of transparency can result in procurement fraud.
  5. Manual labour might lead to human errors and you may end up spending a lot of time doing or redoing repetitive tasks.

Research has shown that poor procurement practices can not only lead to loss of profit, but can increase your costs X5. Not to mention the millions of ‘man hours’ lost. Automation can help the team concentrate on more complex tasks while leaving the rest to technology.

So, to improve your procurement strategy, we suggest the following:

  1. Engage a supply chain council that can monitor the entire supply chain. It can also help improve communication between the different departments of your organisation.
  2. Use technology to automate workflow and improve communications. The entire procurement process can be streamlined and transparency increased, helping to identify issues and reduce the time taken to solve them. Technology can help reduce the cost of invoices by almost 90%, can minimise errors in procurement by 40%, and bring better control over expenses.
  3. Establish solid ties with your key suppliers of materials and services, having such alliances means your supplier relationships will be stronger.
  4. Focus on the Total Cost of Ownership (TCO) and not just the price of the materials or the services. By considering all of the factors that affect the overall cost of ownership, you can get a better picture of all of the costs involved in procurement.
  5. Establish an appropriate level of control of the supply chain and implement the best of supply chain management policies and procedures. By setting up control of the chain, you’ll be able to improve transparency and reduce mistakes as well.

Automation can help increase the efficiency of your entire procurement process. A solid procurement strategy is critical for streamlining purchases to achieve speed, accuracy and efficiency, and this helps you pay the best price for all of the goods and services that you are purchasing. It can also help you save time and choose the best vendors for your materials and services. It can even help reduce order delays and mistakes. However, if this process isn’t well-planned, you’ll face a lot of the issues mentioned in this infographic.

Major Procurement Issues & How to Fix Them with Technology

Image courtesy: PurchaseControl

 

 

Disclaimer: the opinions expressed are those of the author and not necessarily those of Spend Matters. We have not validated the claims made in the infographic.   

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