Top 10 Biggest Procurement Challenges
Without a doubt, challenges abound when managing or implementing projects. Two years ago, United States procurement service provider, DeltaBid, conducted a survey of 500 procurement professionals to identify what they considered the biggest obstacles they faced on a daily basis. The results outlined below, are the ten biggest procurement challenges, and the accompanying infographic summarises the entire survey exercise.
10. Managing the RFx process
Regardless of whether it is a Request for Proposal, Request for Quotation, Request for Expressions of Interest, etc., managing those processes can be a challenge. Procedures ought to be clear, fair and rigorously implemented, and so can be a tremendous undertaking to the procurement team, and the associated support resources.
9. Time/Delays
More often than not, projects are being implemented with a sense of urgency – the outputs are urgently needed. It rarely happens that a project’s outputs are secured well in advance of when they might actually be required. It therefore means that in the majority of situations, there is the added pressure to deliver the outputs consistent with the timelines agreed. Hence, when, for example, actual lead times, or the time required to source certain materials, end up being considerably more than that anticipated or scheduled, it can thwart the entire project.
8. Recruiting, retaining, and training talent
As we noted in our recent article, QBS, QCBS, LCS: What are they, and how are they different?, procurement is a specialist field, and having knowledgeable and experienced personnel on the team is crucial. It thus means there is need to pay particular attention to securing and retaining that talent, and providing the requisite support in relation to skills upgrade and continuing professional development. However, due to the specialist nature of the area, there is a growing demand for such talent, with firms finding it difficult to retain such staff on a long-term basis.
7. Finding the right tools
For particularly large projects that have several components and moving parts, it is essential to have tools that can help the team manage projects more efficiently and effectively. However, finding the right tools – the best for team and/or for the project – can be challenge. Further, the wrong tools can further complicate, and even undermine, what might already be challenging situations.
6. Risk mitigation
As outlined in our article, 5 tips for managing risk in projects, projects are fraught with all types of risks, which need to be managed for successful completion of a project. Some of the risks the DeltaBid survey respondents identified included, “managing sole supplier contracts, reducing maverick spend, and dealing with compliance issues”.
5. Managing stakeholders
Across a project there tends to be diverse interests that need to be managed. Some interests have a direct impact on the project, whilst others would be indirect. However, even among those that have a direct impact, some might be more important than others, or have different influences on the project. It thus means that it can be a challenge to coordinate and manage the various stakeholders (and their interests) that contribute to a successful and well-executed project.
4. Accurate data
On big projects, or for a team that is managing multiple projects, it is crucial to have access to accurate data to ensure timely and well-informed decisions. Data becomes even more important when it has to be communicated to others, particularly senior management, or others who do not have intimate knowledge about a particular project, but may nonetheless have tremendous influence with respect to its execution.
3. Reducing costs and achieving savings
It is a frequently desired goal to have a project completed on time and under budget. For the latter, it means trying to reduce costs and/or finding ways to realise some savings. However, there are a host of reasons why most projects never achieve this, including being under budgeted in the first place, and the increased prices for goods and services, when the project finally get executed. However, such circumstances may result in the parts of the project being minimised or even omitted, to try to keep the overall project within the budget allocated. Hence vigilance with respect to project budget and spend can be a stressful part of managing a project.
2. Strategy selection
Increasingly, procurement is moving from just being an operational function to one that has strategic value to organisations. However, understanding that strategic value, and figuring out how it can be implemented, especially when it may need to be coordinated across multiple locations, or across very distinct functional units or categories of business, can be a distinct challenge.
1. Supplier-related issues
Finally, the greatest challenge procurement professionals indicated were matters related to suppliers – from identifying the best suppliers, and ensuring that a stable supply of quality materials can be maintained, to monitoring supplier performance. Along that spectrum, suppliers also need to be continually monitored to ensure that they deliver what they say they will deliver, within the timelines and to the quality agreed.
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