Your organization’s buying ability majorly depends on the efficiency of your procurement solution. When the software is working well, buying goes quite smoothly. With an ineffective solution, it will lead to a host of common purchasing and procurement problems.
But, thankfully, most common procurement errors have very simple solutions. Many of them can be resolved with technology. Automation is one of the easiest ways to transform the procurement team and fix purchasing mistakes.
Human intervention can be the reason behind expensive mistakes that plague procurement teams. Purchasing managers can easily get into the habit of doing certain things and overlooking instead of improving them.
Whatever may be the root cause for purchasing mistakes, leaving them unchecked can cost your company more. Here, we present a list of most common and expensive procurement mistakes and ways to avoid or correct them.
a) Ignoring Vendors
Your vendors are often a good resource for learning about available products and services and looking for the best deals. Make sure to maintain a robust relationship with vendors and monitor their current communications so you do not miss out anything that could be beneficial for your organization.
You might catch a good deal or be the first one to try out their new products and services. Procurement automation can aid with this by providing you with the option to set up a self-service vendor portal.
It allows your vendors log-in to your solution to update their information, provide missing documents, and look for answers to client service questions. This feature will aid to boost communication between you and the vendor.
b). Not Leveraging Technology
There are many cases where companies are suspicious of leveraging the latest technology to enhance business processes. They worry about additional charges and have security concerns. Procurement solutions save money and time while boosting the entire purchasing process.
Organizations leveraging e-procurement systems minimize their requisition order cycles significantly, requisition to order costs, and cut back on maverick expenditures. They also enhance their spend management. Online procurement software is user-friendly, secure, and takes away the burden to maintain this technology off your IT department.
Let us assume that your company is not prone to reckless spending. Going over budget is a problem with communication or coordination. Whatever may be the root cause, the issue is something you cannot afford to avoid.
Fight against this procurement problem with regular budgetary updates. Make sure that you are communicating with links in the supply chain and bringing everyone on the same page regarding the spending limits. Also, you can leverage procurement systems to execute better controls governing purchases.
d). Separating Major Decisions
You want the procurement solution to move things smoothly. In order to pursue that objective, it is tempting not to bother with looping other teams on purchasing decisions. But this can backfire very easily and end up costing you more in the future.
For major buying decisions which will affect other teams, getting their input before placing the final order makes sense. Keeping the lines of interaction open goes a long way towards making buying decisions that will benefit the whole organization.
This may need some changes in the company’s structure. By automating the departments involved with the solution designed to work together, you can support the changes.
Hence, a company can eliminate most of the above-mentioned problems by implementing an automated e-procurement system and improve its buying ability in the market.