Procurement Challenges in 2023

Challenges in the procurement process are nothing new, they have provided headaches to CPO’s for many years, but the depth of those challenges continues to deepen in what is an uncertain world. For many of us we have a habit to only consider the things that are happening to us directly within our region, but global issues affect us all and these in turn directly affect many if not all of the large organizations who service us every day. As in the First Law of Geography, “everything is related to everything else”. As we can see every day in the news, we know there are issues with energy, communication, distribution and localized workforces but to take a more holistic approach to these challenges we can divide these challenges for CPO’s in to five main categories.

Risk Management

Anyone who has engaged with a corporate organization and its procurement processes will clearly understand the “obstacles” that are thrown at you which at the time can seem unreasonable when these companies seemingly are directly challenging you and your organization to prove you are not supporting criminal acts such as “slavery” or “corruption”. These obstacles are in the good of all as they mitigate the Risk Management needed for the corporate to ensure that not only it remains compliant and correct, but its suppliers are not involved in risks or acts that may affect sourcing such as invoice fraud and compliance issues which could cause the corporate issues further into the relationship. A transparent and compliant supply chain reduces any risks.

Vendor Management

The management of the supply chain is imperative in any corporate organization, while other challenges mentioned here are key in the initial and ongoing engagement. With a good relationship (not always replaced by automation alone) with your vendors any CPO can support their stakeholders no matter what challenges arise, this is a two-way relationship as a vendor that supports their customer base can win more work and grow their own business. However, vendors also need to be managed and performance monitored regularly, to ensure best price and product are collectively available to the corporate as if not this itself can lead to inefficiencies. It is also very important for the relationship with these vendors to have a solution to integrate all their goods and services into your chosen ERP system allowing full transparency of spend.

Information Management

CPO’s need to have a data picture of their corporate procurement requirement to make informed commercial decisions, a lack of having centralized data directly effects the planning, analytics and execution of procurement decisions. Simply put, having all required data inside your ERP reporting will help you gain buying power which can lead to more effective contract price negotiation, this leading to savings directly to the corporate.

Process Inefficiencies

Legacy manual processes within any organization are often costly and prohibitive as they are often obsolete and limit the efficiency of the procurement function encompassing mistakes, delays and sometimes even bias in a decision-making process without all the information available centrally. Identifying manual processes and regularly assessing if they should be maintained are key to improving the overall efficiency of the organization.

Maverick Spend

Uncontrolled spend within a corporate that is outside an established procurement process is detrimental for any CPO in so many ways, it is not only unmanaged loss of revenue but often the spend is not part of a negotiated contact and can be outside of pre-agreed agreements from vendors that have already been vetted to be in line with the corporate views and values as well as compliances. This tail end spend needs to be identified and brought into the corporate procurement processes.

Solutions are available for all of these challenges. A good example of this would be Corvolo, this solution provides assistance in capturing tail end spend which in turns reduces maverick spending where people are not buying from approved suppliers. Having a system that connects to the correct supplier at the right time with correct approval supporting the correct vendor in as automated way as possible, following the approved processes can remove maverick spend and replace it with transparency of data, reducing many of the risks identified by the CPO.

Over the past two decades Corvolo have developed Connect to assist the CPO in providing automation where automation is needed while offering transparency and adherence to processes which can in turn offer great financial savings and increase responsibility and reduction of risk. Technological solutions are now proven to offer a better way to buy goods and services in this hybrid working environment, where organizations and their vendors need to be flexible working 24/7 – 365. Corvolo can offer a solution to help with all the modern-day CPO challenges, as once the supply chain is automated online, it stays and grows online offering a whole host of benefits.