The Pain Points of a Procurement Manager

The Key Drivers of Procurement Management Pain Points

PurchTips Edition #436

The role of the procurement manager is demanding, complexed, but fulfilling one. Management is the science of planning, organizing, leading and controlling the activities of an organization.

procurement management pain points

The mandate of the Procurement Function is threefold:

  1. Manage Spend
  2. Support Operations
  3. Mitigate Organizational Risks

In this case, the procurement manager is responsible for planning, organizing, leading and controlling the mandate of the Procurement Function. Pain points can arise from many elements in the procurement function and the key for procurement managers to thoroughly understand their procurement platform and mandates.

The key drivers of procurement management pain points:

  1. Process and Technology

Often enough procurement processes a are ad-hoc and not robustly designed to handle demand, supply, and forecast dynamics. Many procurement systems are a network of fragmented spreadsheets or expensive and complicated MRP and ERP systems. Between suppliers, customers, and in procurement activities are multiple duplication of conflicting reports, making logistics cumbersome and expensive. Often enough these inter-connecting processes result in either stock outs or significant inventory build-ups, which tie up cash, resources, and increase the Total cost of Ownership (TCO).

  1. Skill Sets

Acquiring and retaining the appropriate skill level is a continued pain point and challenge for the modern procurement manager. There is a shortage of procurement professionals who can perform tactical procurement activities with strategic overview and insight, seeing and managing the big picture. Contract management, negotiation skills, forecast, and demand-supply intricacies are notable knowledge gap areas that add to the list of pain points for procurement managers.

  1. Metrics

Many issues arise from the misalignment of metrics, expectations, and operational definitions between CFOs and Finance Departments and Procurement Departments. Often, procurement managers list “Savings’ that are challenged by CFOs. The key here is to have an understanding and agreement of how savings are to be documented, reported, and realized.

  1. Political and Economic Factors

These elements create havoc and uncertainty in the procurement equation. Pending Trade Wars create shocks in demand and supply patterns and drive up the cost of raw material inputs. In fact, uncertain political climates create fiscal pressures on supply chains thus creating further pain points for procurement managers.

  1. Cyber Security threats

Cyber Security continues to threaten supply chain globally. Procurement managers must ensure that their suppliers do not expose their organization to cyber risk. This is indeed a daunting task that must be part of the structure of contracts and risk mitigation strategies. Working closely with our IT Departments to eliminate cyber risks is key.

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Copyright 2019. This article is the property of the Next Level Purchasing Association and may not be copied or republished in any form without the express written consent of the Next Level Purchasing Association. Click here to request republishing permission.

By David Millington, SPSM, SPSM2, SPSM3 - Director of Education (Next Level Purchasing Association)

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