Understanding Procurement Challenges is Half the Battle to Remediation

By Marc Fuentes | July 22, 2021

At one time, the role of chief procurement officer (CPO) was considered a behind-the-scenes function. CPOs were focused on cost-saving and operational efficiency, and most customers were not concerned with how companies selected supply chain vendors, negotiated contracts, and processed payments. Today, things are far more complicated.
 
Procurement will shift from relying on process hygiene to reduce costs and mitigate risk, to leveraging its knowledge about spend, suppliers, and markets to eliminate overlooked inefficiencies and identify new sources of value. – Gartner
 
Between the worldwide shift to digitally transform businesses, a global pandemic, and other geopolitical events, procurement officers are wearing more hats than ever before. For starters, Brexit may disrupt the efficiency and cost-effectiveness of existing supply chains. The introduction of tariffs, customs duties, and other barriers to trade could have significant implications for how manufacturers source materials and components, assemble products, and access consumer markets.
 
An added layer of complexity is that customers today expect companies to maintain strict sourcing and other environmental, social governance (ESG) practices. When CPOs keep a watchful eye on suppliers, they help gain customer trust and reinforce the brand. When they fail to track suppliers, the opposite is true.
 
Since procurement directly impacts an organization’s supply chain and ultimately their bottom line, identifying and overcoming challenges is time, money, and effort well spent. Adlib’s Content Intelligence Cloud for Supply Chain, equipped with Contract Analytics and Content Transformation solutions, will provide end-to-end visibility into supply chains so CPOs can support a faster time to market, increased profits, and brand equity. Read on to learn more about six challenges unique to procurement so that you can manage supply chain risk with confidence.
 
  1. Dark Purchasing
 Any purchases that are made outside of the defined procurement process fall under dark purchasing. Without a system of accountability, such uncontrolled spending can ultimately be expensive for businesses.
 
When items purchased cannot be justified using capital outlay or material inventory, the resulting loss of revenue and control is a significant challenge for organizations of all sizes.
 
Adlib’s Contract Analytics software provides visibility into procurement processes and mitigates risk for sourcing and supply chain changes. The tool enables CPOs to track and manage supplier interactions by classifying and extracting critical data from business continuity plans.
 
  1. Identify and Mitigate Risk
Companies face risk from every direction, and much of it falls on the shoulders of the CPO. In addition to supplier risk, market fluctuations, potential fraud, product pricing, quality, and delivery make up the most common type of risks. Additionally, compliance risks like anti-corruption and policy adherence can inflict significant damage to a company.
 
Adlib’s Contract Analytics software enables businesses to find, classify, and extract contract data from volumes of complex, inconsistently formatted documents—regardless of type. This makes it possible to quickly comply with changing market conditions and emerging regulations, manage obligations, and expose potential supply chain risk.
 
Procurement will continue its central role in supplier relationship and risk management, using its new analytics capabilities to deepen value-added.  Gartner
 
  1. Too-Long Process Cycle
Often, products and services are procured with a sense of urgency. As a result, actual lead times and the procurement cycle tend to be considerably longer than anticipated or scheduled. Listed below are the common reasons for delays in the procurement process:
  • Delays in preparing technical specifications
  • Overlooking the procurement schedule
  • Extending the timeline to submit bids and proposals
  • Failure to start the evaluation process on time
  • Setbacks in contract negotiation
Procurement will need new mechanisms to evaluate and monitor sourcing discipline across events executed by the business. Gartner
Adlib’s Content Transformation capabilities promote organizational plasticity, resilience, and agility by surfacing, filtering, and routing intelligent data to workflows that need it to make smart decisions faster than the competition.
  1. Inaccurate Data
To make sound procurement decisions, organizations need accurate and reliable data. Without it, purchases based on inaccurate information can lead to inventory shortages, excess inventory, and other procurement challenges that can directly impact an organization’s bottom line.
 
No matter how many analytical capabilities an organization adds to its procurement armory, bad data often translates into bad analytics. – Deloitte
Adlib utilizes automation and AI to surface relevant content buried in workflows and file shares from anywhere across an organization and turns it into intelligent data insights that subject matter experts can leverage can be leveraged by subject matter experts.
  1. Being Strategic About Procurement
As the procurement process continues to become more strategic and collaborative, organizations are starting to realize the benefits of having a long-term procurement strategy in place. An effective strategy depends upon purchase timelines, budget, and risk.
 
75% of CPOs believe that they will deliver a digital procurement strategy in the next five years. – kissflow
 
However, understanding the strategic implications of every step and figuring out a way to implement a plan across all functional units of business is a distinct challenge. Companies need to start by evaluating existing spending behaviors within an organization, which requires data.
 
Adlib’s Content Intelligence Cloud for Supply Chain replaces arduous, error-prone manual processes to collect data with automation and trainable AI models. Automation frees subject matter experts to focus on higher-value tasks such as spending time with suppliers and ensuring their procurement processes remain agile.
 
  1. Coping with Supplier-Related Issues
 One of the most significant challenges in procurement is supplier management. From identifying the right supplier to keeping track of vendor performance and ensuring a stable supply of quality products, the entire process is riddled with uncertainties and complications.
 
To mitigate supply chain risk, companies need to delve deeper into supplier performance, adaptability, and agility to make sure they align with the right partners.
 
Adlib’s Content Transformation solution assesses, monitors, and mitigates supplier risk by automating the document review process and analyzing all unstructured data.
 
The Final Verdict
 
If we expect CPOs to accomplish everything from reducing costs to mitigating risk to facilitating innovation, we should take a moment to acknowledge the many hats we are asking them to wear. In addition, we must buoy their efforts with a robust technology solution. Adlib’s Content Intelligence Cloud for Supply Chain makes it possible for CPOs to perform supply chain risk management due diligence and vendor evaluation continuously with fewer valuable resources. Ultimately, automation and AI enable businesses to maintain and grow healthy digital supply chains that can weather any number of unexpected disruptions with agility.
 
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