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Top 10 Biggest Procurement Challenges [Infographic]

April 19, 2016 by Hillary Ohlmann

Here at DeltaBid, we’ve been looking at what procurement professionals consider to be the biggest obstacles they face on a daily basis. We surveyed over 500 procurement professionals over the past several months and asked them “What is your biggest procurement challenge?” This post discusses the results, and if you scroll down, you can check out an infographic that summarizes our findings.

Here are the ten biggest procurement challenges:

1. Supplier-related issuesprocurement_challenges_ahead.jpg

Finding and qualifying suppliers was one of the most frequent responses in this category. Other common themes included difficulty maintaining a stable supply while meeting high quality standards and monitoring supplier performance over time.

While supplier issues are a challenge for professionals in various supply chain positions, they cause buyers the biggest headaches by far with over 40 percent of buyers surveyed citing it as their number one challenge. This makes sense as buyers are often on the front line, whether it’s finding the right suppliers to buy from or getting them to perform as expected.

 

“[My biggest procurement challenge is] getting suppliers to do what they say they will do.”

Product Lifecycle Manager

 

2. Strategy selection

Many of the responses in this category reflected the changing nature of procurement and the shift from an operational function to a top strategic player in the organization. Professionals are struggling with deciding on strategies to use that will best help them achieve their goals and the words “transform” and “transition” were often used in their responses. Aligning procurement strategy across multiple geographical locations was also a frequently mentioned challenge.

 

“[My biggest procurement challenge is] transforming our department from being a transactional one limited to issuing contracts for goods and services into a relevant strategic area for the company.”

Purchasing Manager

 

3. Reducing costs and achieving savings

It’s really no surprise that this problem ranks in the top three. Lowering costs continues to be a primary procurement mandate. One of the main struggles procurement professionals have in this arena is maintaining cost savings year after year.

However, this concern does seem to originate with upper management as CPOs and Procurement directors were twice as likely to name cost reduction and savings as a top challenge compared to buyers.

 

4. Accurate data

The need for increased access to accurate data  seems to correspond with an increasing reliance on software and tech tools in the supply chain. Market research, benchmarking, and spend analysis appear to be the areas where data is lacking according to survey respondents.

Interestingly, only 2 percent of CPOs and Procurement directors cited data as a top procurement challenge. Perhaps this shows upper management relies on reports from those closer to the action, and their bigger concern is how to use whatever data they’re given to drive strategy selection.


“[My biggest procurement challenge is] finding credible, granular internal data.”

Supply Chain Manager for the Americas

 

5. Managing stakeholders

Rounding out the top five procurement problems: stakeholders. Procurement is at the crossroads of many different business functions. Because of this, collaboration and communication are important, and according to the survey, problematic. Responses here ranged from trying to improve internal customer engagement levels to change management and achieving buy-in from executives and the board.


“[My biggest procurement challenge is] influencing internal and external stakeholders to trust that the early engagement of Strategic Procurement and Contracts functions in the sourcing and supplier evaluation process will ultimately deliver tangible and long-lasting savings for the business.”

Contracts Manager


procurement_challenges_by_job_title.jpgAdditional problems that round out the top ten:

6. Risk mitigation (including managing sole supplier contracts, reducing maverick spend, and dealing with compliance issues)

7. Finding the right tools

8. Recruiting, retaining, and training talent

9. Time (both lead time issues and limited time for sourcing) 

10. The RFx process

 

Top 3 Supplier-related Issues

Nearly a third of all respondents struggled with supplier-related issues. We took a closer look at the survey results to see what exactly procurement professionals were finding problematic. Of those who identified supplier-related issues as their biggest challenge, here are their top three problem areas.

1. Finding suppliers

Of all the challenges procurement professionals face with suppliers, simply finding them was the biggest one. Regardless of whether they were looking overseas to China or elsewhere, finding suppliers who could provide the products they need according to their specifications was a struggle.

 

"My biggest challenges are finding the right supplier in East Asia and, once found, managing the supply risk."

—Purchasing Manager

 

2. Supplier relationship management and performance evaluation

Once they found the right suppliers, building a relationship and everything that goes along with it seems to cause some headaches. When mentioning performance evaluation, quality was the standard most frequently mentioned as a sticking point.

 

"My challenge? Matching capabilities with requirements and finding low cost suppliers that can consistently deliver quality product."

—Procurement Manager

 

3. Evaluating potential suppliers and selecting the right one 

Again, the challenges don't end once potential suppliers are identified. Choosing the right selection criteria, finding the relevant supplier information and collaborating on supplier evaluation were all named as difficulties in this area.

 

(Click infographic to enlarge.)

infographic_biggest_procurement_challenges.png

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Hillary Ohlmann

Written by Hillary Ohlmann

Hillary is DeltaBid's resident writer, copy editor, researcher, and all-around procurement enthusiast. She holds a degree in Journalism and Spanish from UW-Madison.

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