OMNIA Partners Blog

Five Common Procurement Issues That Need Some Love

Posted by OMNIA Partners on February 13, 2014

Valentine’s Day is here and everyone knows it’s the time to express love. In procurement, we know there are some areas that get more love than others

We recently interviewed decision makers from within our membership to discover what issues they’ve been dealing with. We found that many of our members struggle with similar problems.

We picked 5 of the most common frustrations from these interviews to create a list of “procurement problems that need some love” this Valentine’s Day.

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. This can create problems logistically and requires the procurement staff to be better trained and more flexible.

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 indirect 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 and 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.

4. Compliance

Even the best buying strategies can be thwarted by lack of compliance. In order for savings to be at maximum levels, it’s procurement’s job to ensure that 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.

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 cheaper overall costs.

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.

It’s the post-sourcing era, most procurement professionals are under heavy pressure to identify savings and cut costs. How do you plan to stay relevant?

Topics: Group Purchasing Organization, Procurement

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