Due to the globalization of manufacturing operations, procurement network, increasing competitions and increase raw material prices, management is looking for the ways to reduce the cost without compromising quality and to retain or increase margin. Here purchase department is playing an inevitable role to achieve the organizational goal of managing cost and protecting margins. Here in this article we have tried to explain the top common challenges face by purchase professionals.
Budget management
Managing budget is a challenging task. You need to have a strong experienced team, process and technological support across the end-to-end sourcing and procurement process to ensure costs are contained. To run a quality sourcing event, effective capture and scrutiny of requirements, negotiations, maintaining quality benchmarks, dedicated team, process and technology required. But this combination is very rarely found.
Visibility of realized savings.
One of the major objective of purchase department is cost savings, which the purchase professionals try to attain by setting up cost centers, processes and negotiations but the pain area is, they are unable to measure, track and show the management the real time savings they are achieving aligning with business outcomes like working capital, earning per share, and operating profit.
Compliance to Contracts.
The most frustrating discovery for a purchase professional is that the contract they sourced is being ignored in favor of another supplier that is delivering less value than the chosen supplier. CPOs know they are losing potential volume based incentives and diluting their buying power in the market.
Inability to manage suppliers effectively
Another challenge face by purchase professionals is to achieve sourcing excellence and ensuring compliance. Taking periodical reviews of suppliers and motivate them to find more innovative ways towards continuous improvement. This is the lacking area we found, as per many CPOs due to the lack of appropriate skilled resource.
Lack of capital investments
It’s a bitter truth that every organization is giving ambitious saving targets to its CPO but when the time come to invest in technology, resources, and training , organization often ignore purchase department and giving attention to IT, HR , Finance, Marketing and Sales as a front players.
Modern purchase management software is the answer of all the challenges faced by purchase professionals. With dynamic purchase management software, purchase professionals can manage suppliers, create purchase orders, accurate stock entries, track expenses, track purchase history and many more any time , anywhere.