We interviewed key decision makers from within our membership to discover what issues they most commonly deal with. What we found is that a staggering number of our procurement members struggle with similar challenges.We picked 5 of the most common frustrations from these interviews to create a list of common procurement challenges and some tips on how to solve them:
1. Global Category Management
More companies are dealing with spend categories that now span the global economy. Procurement professionals are therefore taxed with having to deal with many spend projects in regions where trusted supplier options are limited, often creating logistical issues. This requires procurement teams to be better trained and more flexible. Additionally, working with your GPO partner to identify multiple supply sources will cut back on risk.
2. Spend Visibility
It’s important to keep spend visible within a company. Many companies struggle with inefficient systems and poor data integrity. The more spend that exists, the more important visibility becomes. Keeping track of spend allows procurement professionals to find areas where spend is inefficient and solve these problems. Having a system that makes spend reporting accurate and easy to monitor is key to keeping spend visibility high.
3. Succeeding with Limited Resources & Staffing
Spend management is a task that can always improve with increased staff and resources. Time and manpower are nearly always in short supply for most procurement professionals and this makes efficiency and prioritization extremely important. If every category of spend doesn’t receive the same amount of attention, there will be potential savings lost somewhere. Procurement pros can save up to 500 hours of sourcing time by moving non-strategic spend onto a GPO contract. These contracts are pre-leveraged and often represent greater savings and service level agreements than any one procurement team can gain on their own. Saving those crucial time resources, especially for under-staffed procurement teams will allow for more strategic sourcing on more complex spend categories. Greater outcome with lesser resources used.
Even the best buying strategies can be thwarted by lack of compliance. In order for savings to be at maximum levels, it is procurement’s responsibility to ensure compliance is at a high level throughout the company. This becomes even more difficult when companies are dealing with branches that function globally. Communication and support from senior leadership are important for compliance, as is the skill of the procurement team to make individual cases for their strategies when necessary. By aligning goals (and strategies) early on in the process with end-user stakeholders procurement can gain a higher level of compliance and smoother adoption.
5. Supplier Consolidation
There is always a struggle in deciding between supplier consolidation or sourcing categories individually. While supplier consolidation improves efficiency, sourcing individually often allows for greater overall savings.
Dealing with a supplier that fulfills several spend categories can reduce the amount of work necessary to stay on top of categories, but limits savings and the ability to negotiate. Often, having a third party partner who manages and helps you monitor several of your spend categories can free up time and resources while still keeping prices low. For example, your GPO can assist in identifying supplier partners that satisfy your savings goals and supply needs; and negotiate service levels like rebates due to spend or supplier consolidation.
Part of the key value your group purchasing organization (GPO) brings to the table is advocacy. GPOs should be partnering with procurement teams to help solve their greatest challenges. Point blank, it’s the post-sourcing era and most procurement professionals are under heavy pressure to identify savings and cut costs. Utilizing reliable resources, like a GPO, will help procurement maintain relevancy.