10 Procurement Challenges that Procurement Managers Face

In today’s fast-paced business environment, procurement managers play an important role in ensuring that business operations run efficiently and smoothly. However, there can be hurdles and obstacles in procurement for procurement managers. It can be quite difficult to stay consistent in procurement decision making, inventory analytics, and much more due to the external factors of suppliers, pricing, changing market conditions, and overall inventory management. These are just some of the procurement challenges that procurement managers face and having no control over these challenges can be quite frustrating. In this article, we will discuss procurement challenges and how procurement managers can mitigate these challenges.

What is Procurement

Procurement is the process or activity of purchasing products, goods, or services from external sources such as suppliers at wholesale prices to meet the needs of a business. Procurement involves a series of steps and activities that are managed and handled by a procurement manager such as planning, sourcing, negotiating, purchasing, and contract management to ensure that a business obtains the right goods, products and services timely, with quality and cost. 

B2B Procurement Key Points

Procurement is usually done through business-to-business transactions. When a business purchases from another business at wholesale price or bulk buying with quantity discounts is possible through negotiation leverage. Which means your business can save more time and much when you buy in large quantities. Here are some key points to consider for B2B procurement.

  1. Strategic sourcing 

B2B procurement involves strategic sourcing, which focuses on identifying and selecting suppliers that can provide the required goods or services in the most cost-effective and efficient manner. This involves conducting market research, evaluating supplier capabilities, negotiating contracts, and building long-term supplier relationships.

  1. Cost optimization

B2B procurement aims to optimize costs by leveraging economies of scale, negotiating favorable pricing agreements, and implementing cost-saving initiatives. Procurement professionals analyze pricing structures, evaluate total cost of ownership, and explore opportunities for value engineering or process improvements to achieve cost savings.

  1. Streamlined procurement processes

B2B procurement focuses on streamlining and optimizing procurement processes to improve efficiency and reduce cycle times. This includes implementing automated systems for requisition, purchase order management, invoice processing, and supplier performance evaluation. Streamlined processes minimize manual errors, enhance data accuracy, and enable real-time tracking and reporting.

  1. Data-driven decision making

B2B procurement relies on data analytics and insights to drive informed decision-making. Procurement professionals leverage data from various sources, such as spend analysis, supplier performance metrics, and market trends, to identify opportunities for cost savings, optimize supplier selection, and drive process improvements.

  1. Compliance

B2B procurement must be able to comply with compliance, regulations, and industry standards. Procurement professionals ensure adherence to procurement policies, contract terms, data privacy regulations, and tax compliance. Compliance measures minimize legal and reputational risks and maintain ethical business practices.

Procurement Challenges that Procurement Managers Face

  1. Supplier selection

Choosing the right supplier that can offer consistent quality, discounted prices, and on-time scheduled deliveries is one of the procurement challenges that procurement managers face. The first step is always the hardest because not every supplier might not be able to provide or meet the standards in what you’re looking for. Ensuring that your procurement standards and requirements are always met is essential to your business. Compromising on the supplier you select can take a toll on your business operations which can negatively impact your business growth. 

If you’re looking for a wide selection of vetted suppliers that provide top-shelf quality products and services with quantity discounts on large quantity purchases, check out Shoppable Business as we provide the best suppliers and products only in the Philippines.

  1. Price negotiation

When buying for your business, it is important to get the best deals and pricing especially when buying in large quantities. This points out the importance of price negotiation when it comes to doing business with other businesses or suppliers. A procurement manager may negotiate with potential suppliers but it may not guarantee the standards of the products that you are looking for. One way to negotiate without compromising product quality is to build a strong supplier relationship to create a win-win situation for both parties. This leads us to the next procurement challenge, poor supplier relationships.

  1. Poor supplier relationships

Having poor supplier relationships is not favorable for a business. When a business is not consistent with their suppliers or doesn’t take the effort to get to know your suppliers, it makes it difficult for your business to curate a healthy business-supplier relationship. As much as possible, you want to get close and build rapport with suppliers because this will save you a lot of money, time, and effort. Why? Building strong supplier relationships enables you to communicate with suppliers freely, have negotiating power, and when your suppliers know you well, they can provide you with top quality products and set scheduled deliveries on time. 

  1. Scheduled deliveries

Setting up scheduled deliveries requires careful consideration and decision making.  Communication with your supplier is key when it comes to getting your orders delivered at a specific time frame. But sometimes, facing external factors such as lack of inventory, logistics personnel, or even harsh weather conditions can make you lose control of when the products should arrive. Do you need the products to be delivered twice a month? Which days are the best to deliver the products? What are possible external factors that the supplier may face that can cause delivery delays? These are just a few of the things that you have to communicate with your supplier in order to agree which dates are good for your procurement deliveries. 

  1. Data and Inventory management

In a business, data and information is vital in making decisions which does not exclude procurement from the equation. With the high demands for business equipment and commodities, it can be quite difficult to keep up and check your inventory levels without the right data management tools. Not to mention, external factors such as limited inventory supplies and logistics challenges from your suppliers can affect the flow of your business. Making the right decisions when to purchase and stock up your business inventory is essential in keeping your business running smoothly. Ensuring that your inventory through data management allows you to forecast inventory levels which gives you room for quick decision making. 

  1. Changing market conditions

One procurement challenge that procurement managers face is how quick market trends shift from one thing to another. Market trends can heavily influence consumer preference when purchasing products. Which means it requires another set of products, goods, or services required in producing products to sell which may require various products from various suppliers. Anothing thing to mention, adapting quickly to market trends and changes can be a procurement challenge if a business is not flexible enough to adapt to these market trends. 

  1. Contract management

Dealing with business to business transactions would always require a written contract whether digital or printed. A contract is a document agreement between two or more parties agreeing to terms and conditions, which is also used in procurement. When procuring for your business, it is critical for a procurement manager to clarify purchasing agreements with suppliers including item pricing for wholesale, warranties, deliveries, payment terms, and other factors between a supplier and a business. Signing complex contracts with demanding needs can make contract management a tedious process to do. With the volume purchases, reaching out to multiple suppliers and back-and-forth negotiations, a procurement manager might get lost in checking every detail in a contract, which can be counterproductive for your business. 

If you want to make procurement easy for your business, Shoppable Business provides digital contracts supplier negotiation, terms and conditions which you won’t have to worry about contract discrepancies when procuring items for your business.

  1. Cost containment

Lowering costs without compromising quality is an important part for a business to maximize its profits with a goal to grow long-term. However, this can be a challenge to procurement especially when a business is having trouble looking for the right supplier to do business with. Looking for the right supplier is all about getting products that can keep up with quality standards, get items at a discounted price at wholesale, and garnering great information through effective communication. 

Looking for the right supplier is a tough job. If you’re looking to do business with a supplier for your procurement, Shoppable Business can help you connect with thousands of vetted suppliers and brands!

  1. Compliance

Compliance can be stressful, especially when processing government documents in the Philippines. With a lot of tax forms, deadlines, and other documents required, it can be difficult to get lost with all the preparation of documents. Keeping physical copies of receipts and invoices involves a lot of risk in keeping you compliant with business requirements. It can get lost, and if that happens, how would a business complete their compliance? It can get stressful and might risk your business of failure to compliance. But with Shoppable Business, all invoices and form 2307 are provided digitally for businesses that require it. This makes it easier for your business to compile all invoices and receipts, and can be made accessible through data storage. You can print your invoices anytime!

  1. Digitized procurement

One of the most daring procurement challenges that procurement managers face is going digital. It can be intimidating at first since traditional procurement provides you with security for being able to talk to suppliers and inspect the quality of products and services face to face. Not to mention, only 74% of businesses in the Philippines are not yet digitized because digital procurement in the Philippines is fairly new to businesses in the country. Digitizing your procurement process makes your business competitive by making procurement effortless through streamlined procurement processes. 

Taking the leap to digital procurement puts you in an advantageous position in the market. It may seem intimidating, but Shoppable Business is here to amplify your procurement process with having to stress out in embracing business digitization.

Easily embrace digitized procurement with Shoppable Business

Shoppable Business is the fastest growing B2B eCommerce in the Philippines that can help you aid your procurement challenges. Shoppable Business can help your business buy wholesale and sell in the B2B market, allowing your business to tap into a wider range of customers and businesses as well. With the help of digital contracts, invoices, logistics & fulfillment, your business won’t have to go through the tedious process of traditional procurement. With thousands of vetted suppliers and brands, finding and doing business with the right suppliers won’t be as tiresome as it used to be. You can start by requesting a quote for FREE and we can connect you with the right suppliers for your business.

Become a buyer or a seller in Shoppable Business today!

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