Streamline your Goods and Services Procurement

Anything anybody has was purchased with the currency of time.

Time is an undervalued commodity in business, unless there is a deadline attached. Procurement is where many good ideas go to die because it takes way too long to get things moving. Companies that continuously invest in streamlining their goods and services procurement processes automatically become better than 90% of their peers. In competitive markets, companies that do the hard things win.

The Deloitte 2023 CPO Survey illustrates this. While 76% of procurement professionals consider digital innovations one of their top priorities, only a meager 32% have successfully implemented their digital strategy.

The procurement process for goods and services is a critical yet complex aspect of business operations. It involves coordination among multiple teams and the management of numerous tasks.

Procurement teams handle a wide array of responsibilities, including processing a high volume of purchase orders, managing relationships with suppliers, and overseeing vendor interactions. Due to the sheer volume of activities involved, this multifaceted process can become particularly challenging.

Even minor disruptions, errors, or sudden shifts in market conditions can significantly impact daily operations and a business's overall financial health. Therefore, streamlining and optimizing procurement processes are essential for maintaining operational efficiency and safeguarding the bottom line.

This post will discuss some of the most common procurement problems and possible solutions to help you navigate these challenges better. Read on!

Common Goods and Services Procurement Challenges

Here are some key challenges that professionals face on a day-to-day basis and various ways to tackle them in the goods and services procurement process:

1. Vague Requirements

Purchase orders (goods/services) with vague or incorrect information about price points, negotiations, and technical requirements are fairly common.

When the requisitioning teams do not have clear and well-defined requirements, expect delays in finalizing requirements, identifying suppliers, and negotiations.

Solution

The procurement teams must clearly define SOPs for teams that need to submit requirements. Document the SOPs so that the teams that enter the requirement submit all the information necessary to take the next steps, such as the type of goods or service, quantity, manufacturer, delivery time, and the cost center.

Front-loading the information gathering makes a difference to all downstream processes. Codify the SOPs into your Procure to Pay software to fit diverse needs.

2. Negotiations

Negotiation is how procurement lands better terms and deals for your business. Negotiation is not always about price. It's also about schedules, payment terms, clawbacks, delivery penalties, and resource allocation.

Solution

Data suggests that almost 50% of procurement still happens through spreadsheets and emails. In complex scenarios with multiple vendors in the mix, data hygiene and project management is the difference between a timely deal and shelving.

Ensure your Procure to Pay software supports connecting with multiple vendors, receiving quotes, and comparing them for effectiveness.

3. Vendor Selection

Selecting the appropriate vendors is one of the most critical decisions in the goods and services procurement process that will impact delivery, quality, and ability to satisfy the needs.

The process of choosing the right vendor includes:

• Clearly defining the procurement requirements, such as accurate specifications for products or services, quality standards, and more
• Doing thorough market research to identify potential vendors
• Shortlisting existing qualified vendors and pre-qualifying chosen vendors
• Sending out a request for proposal (RFP) or quotation (RFQ) to shortlisted vendors
• Qualifying vendor proposals based on terms and fit
• Negotiating terms with qualified vendors

Solution

A solid procurement software can streamline the entire process. Many companies maintain their vendor database in ERP; so your procurement software must sync with your ERP to maintain your single source of truth.

The right procurement software will help you maintain a centralized vendor repository, manage the RFI/RFP/RFQ processes, analyse competitive quotes, and track vendor  performance.

4. Contract Management

The devil is the details and the details are in the contract. Procurement must work with legal to ensure that the contract is vetted for any goods and service procurement. This will prevent surprise price increases and SLA shocks.

When it comes to contracts, measure twice and cut once. If you value long term relationships with vendors, invest time in streamlining contract management.

Solution

To improve procurement contracting, implement a centralized contract management software for draft, review, and approval workflows, alerts and reminders, contract repositories, and SLA tracking.

5. Analytics

A strategic challenge for buying goods and services is the absence of a strong analytics layer. Without data analytics that can draw from your procurement software, ERP and AP, the business will struggle to understand the impact of costing, allocations, spend, and leakages.

Solution

The only way to solve this challenge is to ensure that your teams have data from all systems that impact the bottomline. If you use legacy software, exporting data might be a challenge. Always opt for ways that give you streaming data from different platforms. No-code platforms with open API connectors offer a way to build an analytics application that enables ingestion, analysis, and visualization of business critical KPIs.

Conclusion

Identifying roadblocks, leakages, and excessive spend and continuously optimizing processes to solve them is the only way for teams to improve their goods and services procurement.

As evident from the blog, you need the right procurement software to minimize risks and maximize value from your supply chain.

Software like Hubler enables procurement teams to simplify the P2P process, maintain a self-service portal for your vendors, and manage your budgets as well.