5 Common Procurement Problems
Procurement systems are designed for speed, efficiency and accuracy. However, human error and organizational shortcomings are still witnessed despite precautions taken and can affect the company’s procurement system and purchasing ability. Some of the issues you may encounter include:
This can result from wrong quantity or item ordered. Make a follow up with your supplier if you are in good terms with them and rectify the purchase order. This will save you from putting a strain on the budget in the long run. Adopt a protocol that will ensure purchases get approval from more than one person.
Notably, procurement decisions do correlate with company’s risk management strategy in that, the lower the costs to be incurred the better they are felt at the end. Suppliers who are not cooperative may not give discounts or insist on certain surges to be included in the pricing. Work with suppliers who are able to accommodate the company’s need. These can include by giving discounts especially in large bulk orders and those who are open for negotiation. The supplier can also pay for the costs of shipping goods.
Most of the small medium enterprises are fond of phoning in an order, making impulse buying or making impromptu decisions. During launching of most companies, most of the companies ignore cautionary steps in the procurement process which can result in costs being overrun in inventory. A comprehensive procurement system allows for both prompt orders and more thoughtful decision-making. Though it takes time upfront, it usually saves you a ton of work in the long run. Upon receipt of the goods, it is paramount that the receiving staff should check the goods in order to make sure that they are in good condition
Exceeding the budget
This usually result from poor coordination in the procurement protocol channel of communication and should be addressed promptly. Regular budgetary update affects the financial status of all links in your supply chain including any changes made to the budget. This will ensure that problem gets rectified.
If the receiving staffs confirm that some goods have been damaged, the goods can be returned to the supplier. These will give the courier and the supplier a chance to negotiate on who is responsible for compensating your company.
Most of the procurement issues result from human error, nevertheless they can be easily resolved. Make sure that the procurement systems are aware of these mistakes.