Let’s just take a moment to discuss how difficult it is for those in the procurement department. The job isn’t easily defined. The department touches every area of the company in some of the most interesting ways and works to save costs where many only see deficits. Procurement professionals, like most business functions, face difficult challenges on a daily basis. The pressure to overcome them quickly and efficiently is undeniable. After all, from managing labor to organizing materials, their work holds immense influence over productivity. Luckily, strategy is no foreign practice to these experts.
Traditionally, procurement focuses on the strategic approach to saving money and cutting costs. Now, those in procurement might be answering a myriad of problems, including minimization of spending through maximization of employment potential. Because this generally means balancing the relationships of suppliers, procurement officers might touch everything from office supplies to the very workforce who will one day use them.
Whether you work in procurement or want to offer assistance to your team, this list of challenges and solutions are a great reference to keep in your back pocket. Make this year the most strategic and seamless one yet!
Challenge: Lack of Internal Support or Engagement
One study found that 47% of procurement decision makers cited ‘cost savings realized’ as their top KPI, yet the actual duties of a procurement worker can include other critical functions like risk management, sustainability impact and contingent labor management. Often this team is judged on its ability to save money while being expected to balance many other organizational needs and relationships, meaning a great deal of their worth is overlooked or misplaced.
Solution! Develop a strategic procurement strategy that aligns with the business strategy. And then keep nurturing it. KPIs exist only to make sense of productivity and efficiency in an area. If the ones you report on don’t tell the whole story, find some that do. Work with the executive team and decision makers to connect everyday procurement work to business projects and mission statements. This exercise might also help build better approaches for your team, too.
Challenge: Inadequate Time
You know the old saying, “some things take time”? There’s no doubt attracting, hiring and developing great talent falls within this sentiment. Of course, anyone working on a procurement team can tell you how rushed deadlines tend to be and how often even the most organized process can find itself in a state of acceleration. Externally, talent is moving fast as well and sitting too long on the decision to bring in a new hire can result in losing candidates to competition or even damage your employer brand and reputation. While the acceleration can help with some aspects of procurement, like time-to-hire, other aspects, like quality of hire, might very well suffer. In fact, one study found 14% of procurement professionals say finding the right sourcing strategy and moving from tactical procurement to strategic is a top challenge. That’s why finding a balance can be so difficult.
Solution! Hiring isn’t a rainy day priority. Your hiring and recruitment strategy should be continuously revisited with a year-round plan of approach. It’s important that the procurement team observes trends in hiring needs and how they coordinate with changes in the business landscape. These observations should then be discussed with your staffing agency or agencies. Remember, your organization will be associated with the way they conduct your hiring, so providing real strategy and clear direction puts more control in your team’s hands.
Challenge: Staffing Agency/Supplier Complications
Possibly one of the largest challenges the procurement team faces is that of the very suppliers they rely on for staff. The previously mentioned study reports that 30% of procurement professionals believe their biggest challenges come from supplier related issues. The list of things that can cause strain between the department and their supplier is long and unfortunately begins before they’re even in agreement with one another. One of the most frequently cited complications is simply finding and qualifying the right supplier. Once one is selected, the challenge now becomes whether or not the agreement is adhered to and if the right results are seen.
Solution! Take control of negotiations. If you haven’t noticed, procurement’s multi-tool is strong strategic direction. The more knowledge, the more power. At a baseline, this takes understanding the details of your agreement, but it also means setting standards with your staffing agency. PeopleTicker, for instance, helps organizations understand where their money is actually going when working with staffing agencies. Instead of a bill, procurement workers see what portion of their procurement budget is going to the staffing agency and what portion is the compensation of the contingent laborer they hope will be productive in their company.
Negotiating with staffing agencies isn’t easy. Download our guide to actionable bill rate negotiation tips!
Did you know that nearly 60% of all contingent labor is unaccounted for in budgeting, forecasting and planning in most companies? That’s ineffective for all procurement team KPIs, from saving costs to managing supplier relationships all the way to finding top talent. Finding the answers to your company’s own future strategy decisions can restore balance between you and your supplier and even cut costs.
Facing the challenge of strategizing your approach to hiring? Procurement’s guide to the contingent labor market is here so you can finally navigate with confidence.
Download your copy of the 2016 review on The Contingent Labor Market: