Friday, 12 December 2014

Common Challenges in Procurement Cycle

Authored by  Junaid Khan 

Complaints and problems are natural part of every business. But on other side complaints and problems gives a us a chance to change the things and decisions. In the Material management we can elucidate this as reevaluating the existing procedures and approaches in orders to contribute more to corporate success. Below please find the review of some common challenges. 

Delivery of Goods
Adequate supply chain management is all about delivering the right product and quantity in the right condition with proper documentation to the right place, at the right time all at the right price. A clear process is required in order to ensure that all goods procured by the organisations are accounted for and can be traced. The most common issues surrounding deliveries are over / under deliveries, damaged and incorrect goods.

Cost control
Cost control is a continuous process that begins with the proposed annual budget. Supply chain operating costs always effect due to sudden raise in freight prices and hidden labor rates and their expenses. On other side supply chain organisations can control these costs through thousands of potential matrices. Managers need to zero in on the critical few that drive total supply chain costs within their organizations.

Risk Management
The process of identifying risks, assessing risks and developing strategies to manage risks is known as risk management. By understanding potential risks to business and finding ways to minimize their impacts, managers can helps the organisations to recover quickly if an incident occurs. Supply chains must periodically be assessed and redesigned in response to market changes, including new product launches, global sourcing, new acquisitions, credit availability, the need to protect intellectual property, and the ability to maintain asset and shipment security. In addition, supply chain risks must be identified and quantified.

Vendor relationship management
Vendor relationship management is a intellectual approach to manage an interactions of vendors with the organizations that supply the goods and services it uses. The methodologies of vendors pre-qualification and measuring criteria of vendors performance vary from organization to organization even different departments within same organisations have different methods for calculating the results. But the trust begins when managers let go of internal biases and make a conscious choice to follow mutually agreed upon standards to better understand current performance and opportunities for improvement.