5 Chilling Challenges Facing Procurement Today
From uncovering hidden supply chain specters to exorcizing bothersome data demons, procurement managers certainly have their hands full. While today’s procurement teams may not be plagued by actual ghosts, goblins, or ghouls, things can still go bump in the night when procurement leaders aren’t equipped with the right tools to overcome their team’s terrors.
This blog dives into five horrors haunting procurement organizations today to find out which ones are truly wreaking havoc and which ones might actually be a red herring. Read on if you dare.
Data Demons Lurking in Every Corner
Data is becoming more readily available than ever, especially in procurement. As data-driven decision making becomes increasingly important, procurement teams are tasked with an ever-growing challenge to sift through and make sense of more data than they ever have before. More often than not, the raw data can be inaccurate or misleading. After all, more data sources doesn’t necessarily mean better or cleaner data to strategize from.
In fact, these inaccurate “data demons” have become so commonplace that a large majority of procurement professionals don’t even trust their own datasets. In one survey, 75% of respondents doubted the accuracy of the procurement data they present to their companies. The chilling result? Nearly 80% of non-procurement executives are not confident enough to use procurement’s data when it comes to strategic decision making.
This lack of confidence is hardly surprising given that a whopping 74% of procurement organizations still rely on spreadsheets to track and manage their performance. Outdated data and data inaccuracies can then lead to ancillary challenges, such as:
- Misguided procurement decisions
- Delayed processes
- Increased operational costs
Unfortunately, until the majority of procurement leaders embrace data quality initiatives and throw out the spreadsheets in favor of advanced automation and algorithmic tools, this procurement horror is likely to live on.
AI Possessing Procurement Jobs
Procurement hasn’t been immune to the question spreading panic throughout hundreds of industries this past year — is artificial intelligence coming for your job? The rapidly developing technology has taken many by surprise, sowing seeds of uncertainty about humans’ place in a future where cost-effective AI brings unrivaled analytic and automation capabilities to the table.
Rest assured, however, that when it comes to procurement, the haunting narrative of an all-encompassing AI coming for every person’s job is most likely just that — a scary story. Fortunately for us mere mortals, humans bring invaluable contributions to the procurement process that aren’t likely going to be replaced by machines anytime soon:
- Strategy: Human judgment and expertise are invaluable assets when it comes to things like supplier relationship management, negotiations, and more. Given the nuances of such tasks, having a human to sign off on strategy isn’t likely to be replaced.
- Negotiations: While AI can certainly speed up aspects of negotiations, procurement professionals’ understanding of market dynamics is key to finding (and maintaining) mutually beneficial agreements.
- Supplier relationship management: Unarguably, humans are better at dealing with other humans than AI is. Interpersonal skills and trust building are key aspects of a supplier-vendor relationship that AI can’t yet replicate.
- Creativity: The human creative touch can go a long way to drive innovation and optimization in processes beyond automation.
- Cross-functional integration: Procurement proactively works with other internal departments such as finance, operations, and marketing. Even if some rote work is automated, humans will still need to be at the helm to steer procurement decisions on a cross-functional level.
In sum, AI and machine learning tools represent more of an opportunity to embrace than an inevitable evil to be wary of. Being curious and open to AI solutions will be more beneficial to procurement teams in the long run and set them up to succeed in the new future humans will use AI to build.
Supply Chain Specters
Whether it’s geopolitical unrest, fluctuating inflation rates, climate change, or recession fears, the specters driving supply chain woes are unlikely to “rest in peace” anytime soon. Supply chain challenges plague procurement teams to this day, and without robust strategies in place to plan for and mitigate these issues, procurement teams might find themselves perpetually haunted by them.
Some common supply chain disruptions include:
- Uncertain cross-border trade cooperation
- Cyber criminal activity
- Material access issues
- Rapidly developing supply chain technologies
- Increasing emissions scrutiny
Procurement teams need to ensure they have the right risk mitigation strategies in place in order to avoid the buyer panic that can arise from supply chain disruptions. Diversifying suppliers, implementing supply chain visibility tools, and monitoring supplier performance are all crucial for banishing any lingering fears about supply chain’s effect on the procurement process.
Undead and Outdated Processes
To this day, old processes and outdated technologies remain embedded in procurement teams like skeletons in the closet refusing to come out. More often than not though, relying on outdated tools is a horror that haunts procurement teams in broad daylight — 42% of companies admit their legacy solutions need replacing.
However, knowing you need to change and adopting change are two different endeavors. Many organizations are stuck in the “pilot phase” of implementing digital tools and have yet to reach an enterprise scale.
Not fully adopting the right tools can hold procurement back from reaching its full potential and put it behind competitors. In today’s landscape, procurement executives recognize digital transformation’s singular importance, with 45% saying they are accelerating digital transformation at their organizations. Indeed, the same survey found the top two priorities among procurement leaders are:
- Improve analytics and insights capabilities.
- Pursue procurement digital transformation and modernize the landscape.
However, procurement’s progress on the digital transformation front is looking promising overall. Procurement leaders are planning to spend 5.7% more on technology in 2023, with priority areas in robotic process automation, advanced analytics, e-sourcing, and e-procurement.
Not Using Predictive Procurement Orchestration to Ward Off Inefficiencies
If scary movies have taught us anything, it’s that going it alone is never a good idea. The same can be said for procurement. Without tools like Predictive Procurement Orchestration (PPO) at your organization, many of the aforementioned procurement challenges can seem much more menacing than they actually are.
Arkestro’s PPO tool was designed to help procurement professionals become more efficient by providing real-time recommendations that drive real action. For example, PPO can:
- Ingest information, including hard-to-decipher data sets
- Reveal insights using AI and machine learning
- Drive actions and automate tasks so you can focus on moving the needle where it counts
Remove the mask obscuring your procurement challenges with Arkestro. Request a demo to learn more.