Every organization can face procurement issues, and they can disrupt the entire supply chain. By solving these issues, you can streamline your entire supply chain and even speed up your operations. This can help you save both time and money that would have unnecessarily been spent due to the procurement delays.
Here are some common procurement issues that your organization might face. By being prepared for these in advance, you’ll be better equipped to deal with them.
1. Lead Time
Lead time is an important parameter that needs to be looked at when it comes to procuring materials. If your suppliers have a longer lead time than your estimate, then it can become a major issue.
You might find it difficult to get enough materials to continue your production at a consistent pace.
2. Communication Problems
Ineffective tools are leading to a loss of 32 million man-hours and $1.5 billion every year in the United States and Canada alone.
Many organizations face communication and documentation issues. They are sometimes the results of poor process planning and ineffective tools.
Due to these problems, you may encounter issues with procurement, such as duplicate payments. Poor control over the deals can sometimes lead to procurement fraud as well.
3. Costs of Materials and Services
Cost of materials and services is yet another major procurement issue faced by companies. It is difficult to reduce the costs of procuring materials and services because you don’t have control over the market and supplier rates. If you’re not able to control these costs, your overall costs can rise up by up to 5X.
One of the best ways of reducing the number of procurement issues is by automating your process. You can use procurement management technology to minimize these issues.
Software can help you automate tasks which can be repetitive in nature and streamline your workflow. They can also help you organize your data. This can help you find duplicate payment issues and data duplication as well.
For instance, if you just automate your invoice processing, the errors can be reduced by nearly 40%. The cost per invoice can also drop by almost 90% due to automation. Lastly, your invoice exception rate can also be reduced to as low as 10.7% through this method.
A competent procurement process can help you grow your business by saving time and effort, and by reducing order mistakes and the cost of goods. To learn more about how you can do so, check out this infographic by PurchaseControl.