Let’s take a look at what procurement is. What are all the processes involved in procurement? Why do we need procurement management? Why is procurement one of the most important for a company? What are the emerging issues and challenges in procurement? How do overcome those?

In basic terms, Procurement is a process of obtaining goods and services for business purposes. It involves raw materials, equipment, supplies, facilities, and labor, anything related to the company's operational requirements. 

It involves a lot of processes to procure products and services, they are: 

1. Identifying the business’s operational needs

2. Budget approval

3. Evaluate and select a suppliers/vendors

4. Negotiating price

5. Place an order

6. Inspect after received 

7. Approve and pay

8. Keeping a record

Procurement management plays an essential role in the process to give a competitive advantage in the market. It is a strategic approach to optimizing organizational spending which helps to increase a business’s profitability. It involves numerous responsibilities as the procurement process becomes more complicated and riskier. 

As technologies, digitalization, and competition are increasing in this modern world, the procurement process becomes even more complex. So there are a few emerging challenges and issues in procurement that are discussed below.

1. Automation and Digitalization:

A lot of companies have started and adopted digitizing and automating their procurement processes to reduce the need for traditional manual and paper procurement, help eliminate time-consuming tasks, and lead to more efficient decision-making. Though digitalization leads to facing initial costs and disrupts the supplier's relationship if the suppliers have not switched to digitalization. But we can witness that the trend is changing to digitalization.

2. Risk Mitigation:

The most challenging one of the procurement processes is procurement risk which is Risk Mitigation. Market risk, potential fraud, cost, quality, and delivery risk are the most common types of risk. It’s a procurement manager's responsibility to find, analyze, control, and monitor risk. If we have too much risk and fail to recognize the risk, it might lead to chaos and disrupt the company’s profitability. 

3. Contract Management:

Procurement contracting is one of the most challenging ones because of its complexity. Procurement Contract Management is an act of managing contracts made between the company and vendors. Procurement managers or departments managed to navigate desktop computers that collected most of the contracts and data. But in recent years, many companies have centralized and automated the procurement process with contract management software. 

4. Unreliable Data:

The business world runs and transforms into data for decision-making. Companies may disrupt, and lose money and time. Poor data management by the procurement department can lead to huge inventory or inventory shortages. In other words, inaccurate data can lead to a loss in profitability.

5. Business Intelligence: 

Business intelligence, or in other words market intelligence, is one of the issues many procurement managers are lacking. Procurement managers must give more importance to keeping updated on changing economic factors and strongly understand a company’s market to procure direct materials at the best reasonable price. As there are huge data sources in this modern world, managers face huge challenges in the market. So, managers must give some importance and spend more time on market research and collecting data to get insights.

Conclusion:

Procurement leaders and managers can help to reduce the cost and risk in the procurement process by transforming and adopting automation which can improve flexibility and accessibility, reduce costs, find relevant data points and insights, reduce delays, improve risk management, and facilitate audits.

 As per Deloitte research, “Digital transformation is becoming an imperative for top-performing procurement service organizations”

But finding and obtaining effective software and utilizing it might cost you a lot and increase the risk in the management. 

So, Almost all of the emerging challenges and issues detailed here are easier and less risky to manage for your company with the help of 13SQFT.COM. It helps you by providing procurement services in the procurement process to reduce unnecessary costs and improves your company's performance to enhance its competitive advantage in the market.