Top 5 Procurement Challenges Impacting Businesses in 2018

Today, no one can say that procurement professionals and sourcing teams have it easy. They face daunting challenges and struggle to stay abreast of all the regulatory changes happening around the globe. Procurement, for many, is an undervalued operation that impacts every facet of your business. While there are many procurement challenges, each organization will face its own unique set of challenges. In this article, we’ll talk about some of the common procurement challenges that companies will face while sourcing goods and services this year.

TOP PROCUREMENT CHALLENGES

Effective risk management

risk management2 Procurement challenges are an inherent part and parcel of every business process. Each business faces them at some point but managing them effectively is something that every procurement team struggles to do. With the focus shifting towards business expansion, it is no longer good enough to engage with tier 1 suppliers. Implementing an effective risk management strategy at the very start of the procurement process, therefore, becomes a necessity for companies looking to expand their boundaries. But before any company thinks about engaging with tier 2 or tier 3 suppliers, implementing risk mitigation strategies like analyzing the risk of each supplier, comprehensively understanding their supply chain, and putting backup plans in place in case things go wrong become essential.

Read on to know more about procurement challenges.

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Procurement Consulting Market: All You Need to Know

Is procurement a profit center or a cost center? That’s a debate for another day. However, it is hard to ignore the fact that companies can save millions and millions of dollars in their procurement process. The savings can arise from superior supplier selection, material purchase, risk assessment, and many other factors. These savings are not always evident, and processes such as supplier selection and risk management can get overly complicated. This is where companies need to consult experts in the field of procurement. As a result, they mostly turn towards procurement consultants.

Regional market

North America and Europe are the most mature markets for procurement consulting services. These regions consist of a number of industry leaders that employ strategic procurement and are moving toward value chain integration. In the APAC region though, buyers are facing intense pressure to improve procurement as it is increasingly becoming an important source of goods and services. Fast-growing operations in countries such as China and India have resulted in the need to improve efficiency in operations.

Pricing outlook

Talent cost, including salaries, training, and development, is a major cost component for procurement consulting firms. While retention of talent is a top priority in mature markets such as North America and Europe, attracting talent is the focus for service providers in MEA, and it is training and development in APAC. Buyers are increasingly considering that their internal team lacks the capabilities to enhance their procurement strategy. This is expected to significantly increase the outsourcing of strategic sourcing and category management functions. This trend is especially evident in the financial services sector.

Cost drivers

Procurement consulting firms have to bear the employee costs including recruiting expenses, employee salary, and benefits which are expected to marginally increase due to inflation and the need to hire skilled professionals. Increasing need for service providers to retain talented consultants are expected to augment the salary costs for service providers. Also, the availability of advanced technology such as ERP software, automation, analytics, and cybersecurity, that enhances end-to-end procurement consulting services has increased service providers’ overall costs.

Negotiation strategies

Companies can save up to 8% of their cost base by adopting a reward-based engagement approach. This way consultants also increase their repeat business and bring innovation in services accessibility. Additionally, category management initiatives such as identification of cost-saving opportunities based on innovation, engagement, and billing can also result in significant cost savings.

Industry best practices

Category managers in this sector are focusing on developing a well-defined strategy to optimize procurement spend. They are identifying cost-saving opportunities such as adopting technologies, collaborating with vendors, and conducting price benchmarking studies to minimize the spend. Additionally, the focus is on developing strategic partnerships, where buyers and suppliers engage in contracts that do not work on incremental costs but are designed flexibly to incorporate prevailing market and pricing trends.

Increasing Health Awareness Amongst Consumers Driving Demand in the Global Cardamom Oil Market

London, Apr 04, 2018: Increased demand from end-use industries such as food and beverage and cosmetics is driving the global market growth as cardamom oil is widely used as a raw material in these industries. Additionally, is also used in ayurvedic rehabilitation centers for aromatherapy due to its antimicrobial and antioxidant properties.

SpendEdge’s latest procurement research report on the global cardamom oil market offers an in-depth assessment of the crucial factors influencing the supply market, strategic procurement and sourcing decisions, pricing models, and procurement best practices. The report, a part of the agro commodities and raw materials, also offers detailed insights into the supply chain management, key market developments, and demand-supply shifts to help sourcing and procurement experts make smart procurement decisions.

“Consumers in the food and beverage industry prefer healthy diet to overcome diseases such as diabetes, cardiovascular related diseases, digestive problems, and respiratory disorders. Consumers are demanding cardamom oil as it is a healthy substitute for regular oil” – Tridib Bora, Agro commodities and raw materials expert at SpendEdge.

There is lack of transparency in the supply chain of cardamom oil suppliers. Cardamom seeds/pods used to produce cardamom oil are brought from small farmers that are opaque about their farming practices, leading to decreased visibility in terms of cardamoms’ quality used in the production process. As a result, buyers are facing procurement challenges regarding the supply chain traceability of the cardamom oil.

Need more insights on this report?

This procurement report on the cardamom oil market offers insights on:

Supply markets, growth drivers, trends, and imminent restraints
Key suppliers and assessment of their capabilities
Procurement best practices
Negotiation strategies and cost-saving opportunities
Pricing models and category innovations
For a comprehensive, detailed list, view our full report

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Adoption of Automation Driving the Demand in the Stackers Market

London, Mar 23, 2018: The growth of port infrastructure and rise in the adoption of automation across end-user industries, such as e-commerce, packaging, logistics and warehousing, food and beverage, and mining, have driven the demand for stackers that are used for picking and moving products at operational facilities of end-users. This, in turn, is driving the growth of the global stackers market.

SpendEdge’s latest procurement research report on the global stackers market offers an in-depth assessment of the crucial factors influencing the supply market, strategic procurement and sourcing decisions, pricing models, and procurement best practices. The report, a part of the facility management, also offers detailed insights into the supply chain management, key market developments, and demand-supply shifts to help sourcing and procurement experts make smart procurement decisions.

“The increased use of reach stackers at ports to move goods from the ship to the port facilities is contributing to the growth of the stacker market. Stackers help in efficient handling of goods with minimal damage during transportation from ship-to-shore.” – Tridib Bora, facility management expert at SpendEdge.

Buyers generally prefer to procure stackers that have high reliability to minimize unexpected breakdowns. However, buyers find it difficult to analyze and compare highly reliable stackers due to high customization and the availability of a large variety of models. As a result, procurement teams in this market are facing difficulty in analyzing the reliability of stackers.

Need more insights on this report?

This procurement report on the glass stackers market offers insights on:

Supply markets, growth drivers, trends, and imminent restraints
Key suppliers and assessment of their capabilities
Procurement best practices
Negotiation strategies and cost-saving opportunities
Pricing models and category innovations
For a comprehensive, detailed list, view our full report

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Factors Hindering the Growth of the Global Rapeseed Oil Market

In 2015, the Telegraph UK came up with an article on rapeseed oil headlined, “Goodbye, olive oil: why we’ve all fallen in love with rapeseed.” Even today, the headline perfectly outlines the growing popularity of rapeseed oil as a healthier home-grown option. Consequently, it is also the third-largest source of vegetable oil in the world after palm oil and soybean oil. The oil is extracted from the seeds of the Brassicaceae flower, which is a common crop in Europe. Rapeseed oil is commonly used in culinary applications such as sautéing, frying, and baking. It is preferred over other oils due to its higher smoke point compared with other vegetable oils. This oil has higher essential fatty acid contents and has the lowest saturated fat levels compared to any other oil. Owing to such health benefits, the demand for rapeseed oil is on the rise in emerging economies such as China, India, and Brazil. The procurement market intelligence report from SpendEdge estimates the market to grow at a CAGR of 4.64%. Although the market faces a healthy growth prospect, suppliers in this market have to overcome a few challenges to take advantage of the market’s growth.

Challenges in the Rapeseed Oil Market

Threat from disease and crop infection

The rapeseed plant can be affected by series of infection which affects various parts of the plant across its lifecycle. For instance, fungal diseases such as Sclerotinia stem rot is caused by the fungus Sclerotinia Sclerotiorum, and the fungus Leptosphaeria Maculan causes blackleg. Such infections are further complicated by rainfall, as it drives up the infection rates. For instance, in Australia, a prolonged period of rainfall resulted in yield losses of about 25% in 2016. A severe reduction in the crushing volume increases the prices for rapeseed oil. To tackle such problems, regulatory bodies across regions have created guidelines for cultivators to manage aspects such as field selection, use of fertilizers, weed control, and harvest cycles for rapeseed.

Wide range of available substitute

The vegetable oil market has a wide range of substitute products available. Be it in the field of food applications or non-food applications, the number of oils available is enormous. For instance, people across the world use either sunflower, safflower, coconut, olive, soybean, or peanut oil for culinary applications. Also, rapeseed oil can be substituted by soybean, kernel, or palm oil in non-food applications. Dietary revolution is a major factor in determining the preference for a particular kind of oil. Over the last few years, people are increasingly using extra virgin olive oil due to its light and fruity flavor and other health benefits. According to industry estimates, the consumption of olive oil increased by 250% and 1,400% in the US and Japan, respectively, in the last 25 years.

Adulteration and contamination

Suppliers in the vegetable oil market are adulterating edible oils with inexpensive oils such as bran and cottonseed oil to save costs. Such cases are prominent in emerging economies where the supply chains are not structured. Such adulteration and contamination can have serious health issues as well. For instance, in the spring of 1981, adulterated rapeseed oil created toxic syndrome that affected about 25,000 people. Also, the mixture of mustard oil with inexpensive argemone oil causes dropsy disease, which causes oxidative stress and the death of RBCs. It is possible to use brassicasterol to detect adulteration of rapeseed oil.

Health and safety issues

Although rapeseed oil is considered to be more healthier than other oils, its high content of omega-3 fatty acid can make it rancid and foul when exposed to oxygen and high temperatures. Additionally, some reports link consumption of canola oil with kidney and liver diseases, hypertension and stroke, and retarded growth among infants. The availability of such reports could affect the sales and consumption of canola oil.

Read more about the challenges in the rapeseed oil market along with supply market insights, procurement best practices, sourcing models, and key suppliers in SpendEdge’s upcoming report on the global rapeseed oil market.

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Use of Methylene Chloride as an Extraction Solvent in Food Industry driving the demand in the methylene chloride market

London, Mar 14, 2018: Increase in use of methylene chloride as a solvent in end-use applications such as in the production of pharmaceutical products, fine chemicals, and polymers, and as an extraction solvent in the food and beverage industry is driving the growth in the global methylene chloride market.

SpendEdge’s latest procurement research report on the global methylene chloride market offers an in-depth assessment of the crucial factors influencing the supply market, strategic procurement and sourcing decisions, pricing models, and procurement best practices. The report, a part of the chemicals portfolio, also offers detailed insights into the supply chain management, key market developments, and demand-supply shifts to help sourcing and procurement experts make smart procurement decisions.

“The demand for methylene chloride in APAC is high due to economic growth in countries such as China and India, which has led to increase in infrastructural development. This is leading to rise in demand for methylene chloride among end-user industries such as paints and coatings and adhesives.” – Tridib Bora, chemicals procurement research specialist at SpendEdge.

The prices of methylene chloride are highly volatile as it depends on factors such as demand and supply of methylene chloride and the prices of raw materials. As a result, buyers in this market are facing procurement challenges to estimate the prices of methylene chloride for a contract period and in estimating the overall procurement budgets.

Need more insights on this report?

This procurement report on the methylene chloride market offers insights on:

Supply markets, growth drivers, trends, and imminent restraints
Key suppliers and assessment of their capabilities
Procurement best practices
Negotiation strategies and cost-saving opportunities
Pricing models and category innovations
For a comprehensive, detailed list, view our full report

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Growing Demand from Automobile Industry Driving the Demand for Electric Motors

London, Mar 12, 2018: There has been an increase in demand for electric motors from the automobile industry due to increased production of electric vehicles. Electric vehicles do not pollute the environment and do not require fuel. Hence, their demand is rising, which is driving the growth of the global electric motors market.

SpendEdge’s latest procurement research report on the global electric motors market offers an in-depth assessment of the crucial factors influencing the supply market, strategic procurement and sourcing decisions, pricing models, and procurement best practices. The report is a part of the heavy industry, also offers detailed insights into the key market developments, supply chain management, and demand-supply shifts to help sourcing and procurement experts make smart procurement decisions.

“The automobile industry being one of the major end-users of electric motors holds nearly 30%–35% of the global electric motors market. In the automobile industry, electric vehicles, which include hybrid vehicles, are the major application for electric motors. The growth of the automobile industry is directly contributing to the market growth of the electric motors market.” – Bhuvaneshwari Udayakumar, heavy industry expert at SpendEdge.

Buyers often encounter difficulty in assessing the suppliers based on the likely maintenance cost during the on-boarding of suppliers. During the analysis of the LCC of electric motors, maintenance cost is an important factor considered in the evaluation process. However, during real-time operation, due to fluctuations of parameters such as load and current in the operating environment that alter the power and performance of electric motors, the life of electric motors is affected. As a result, buyers face procurement challenge in assessing expected maintenance cost during procurement.

Need more insights on this report?

This procurement report on the electric motors market offers insights on:

Supply markets, growth drivers, trends, and imminent restraints
Key suppliers and assessment of their capabilities
Procurement best practices
Negotiation strategies and cost-saving opportunities
Pricing models and category innovations
For a comprehensive, detailed list, view our full report

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Top 5 Countdown – The Best of MRO Supplies and Services Vendors

Any company’s job is not all done after the purchase of an equipment, plant, machinery, or such assets. In fact, it’s a whole new challenge to keep such assets up and running. This is where the importance of MRO supplies gets highlighted. The field of maintenance, repair, and overhaul (MRO) is vast and comprises of multiple products and services. Technically, MRO services include functional checks, repairs, servicing, replacement, residential installations, supporting utilities in industrial installations, infrastructure building, and machinery building. In some domains like aircraft management, MRO services also include the supply of spare parts, raw materials, accessories, adhesives, sealants, consumables, and coatings for aircraft maintenance at the utilization stage. So, who are the top suppliers of such MRO products and services?

Top MRO supplies and services providers

Sonepar

Sonepar is an independent family-owned company and a global leader in the B2B distribution of electrical products and related services. Founded in 1969 by Henri Coisne, Sonepar operates through 345 entities spread across 2,800 branches globally. The company saw an increment in revenues for the year 2016 by earning 20.6 billion Euros, which can be attributed to the growing applications for electrical equipment, need for new services, and rapidly changing product technologies. Wiring devices, HVAC, distribution transformers, home automation, industrial automation, and VDI and some of the key product and services offered by this MRO supplies and service provider.

Ferguson plc

Ferguson plc formerly known as Wolseley is the world’s largest distributor of plumbing and heating products. The MRO service provider has a broad customer base that comprises 60,000 suppliers and 1.1 million consumers worldwide. The company sells its product under a different brand name including Center, Raptor, Jet Range, Center Rad, and Nabis. The company has operational units spread across the US, Canada, the Nordic region, Central Europe, the UK, and France. Ferguson plc offers a wide range of MRO supplies including boilers, radiators, pipe systems, drainage systems, cooling systems, and commercial plumbing.

Rexel

Rexel is a French group founded in 1967 and is a global distributor specializing in products and services to the energy sector. The company distributes MRO supplies and services in the areas of technical supply, automation, and energy management. This MRO services provider offers its products to commercial, industrial, and residential sector with the majority of its revenue incoming from the commercial sector. Their MRO supplies include lighting, climate control, security, photovoltaics, EVs, and home automation products and solutions. The company boasts over one million products in its portfolio with operations spread across 2,100 branches globally.

Wurth Group

The Wurth Group is considered a leading vendor and a worldwide wholesaler of dowels, fasteners, screws and screw accessories, tools, machines, and installation materials. With a global customer base of over three million people, the company offers more than 125,000 products. The company provides a diverse range of products and services including chemical and technical products for maintenance, servicing and bodywork, tools for pneumatic and electric machines, rapid assembly systems, and fastening materials and sealing technology.

W. W. Grainger

W.W. Grainger is one of the Fortune 500 industrial supply company and also the oldest provider of MRO supplies. The company serves over three million customers through a network of 598 branches and 33 distribution centers. Their MRO services portfolio includes safety, facility, energy, lighting, mid-stream utility, and after-hours emergency services. In the US alone, the company boasts an impressive portfolio of over one million products serving over 7,000 brands.

For more information on MRO supplies, MRO services, top vendors in the MRO industry:

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Increase in Number of Financial Regulations Driving the Revenues in Forensic Accounting Services Market

London, Mar 07, 2018: The rise in the number of financial regulations such as the SOX Act and Dodd-Frank Act has led to a rise in adoption of forensic accounting services among organizations. This is mainly because these services protect organizations from financial and legal risks. It is estimated that the rise in the number of regulations will increase the revenue of forensic accounting services market.

SpendEdge’s latest procurement research report on the global forensic accounting services market offers an in-depth assessment of the crucial factors influencing the supply market, strategic procurement and sourcing decisions, pricing models, and procurement best practices. The report, a part of the financial services, also offers detailed insights into the supply chain management, key market developments, and demand-supply shifts to help sourcing and procurement experts make smart procurement decisions.

“The need to store a vast amount of data is driving buyers to use big data. This, in turn, is increasing buyers’ demand for forensic accounting services to be performed on large amount of data to identify fraudulent cases and minimize risks associated with it. This will drive buyers to outsource forensic accounting services.” – Tridib Bora, financial services expert at SpendEdge.

Buyers face issues related to vendor lock-in as it is difficult to switch from one service provider to another. High switching costs and sharing of a large amount of data with service providers have made it difficult for buyers to shift to another service provider. Such vendor lock-in issues are causing procurement challenges in the forensic accounting services market.

Need more insights on this report?

This procurement report on the forensic accounting services market offers insights on:

Supply markets, growth drivers, trends, and imminent restraints
Key suppliers and assessment of their capabilities
Procurement best practices
Negotiation strategies and cost-saving opportunities
Pricing models and category innovations
For a comprehensive, detailed list, view our full report

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Procurement Analytics: 7 KPI Metrics You Need to Track

As far as procurement managers are concerned, one of the primary goals is to ensure that the company’s procurement teams are as efficient and effective as possible. Some of the other areas of concern include reducing unnecessary spend, lowering cost, accelerate procurement cycle, and to ensure compliance. But how they correctly measure if these goals are being accomplished successfully? Managers must be in a position to carry out the right procurement analytics tools that would help them track results, measure progress, and identify the areas of improvement. Furthermore, with the help of procurement analytics and the right KPI metrics, it is possible to track whether the procurement team is delivering the value-add that has been planned. Here are some of the top KPI metrics that every procurement manager needs to keep track of :

Maverick spend

Most companies face the problem of employees indulging in ‘rogue spending’ without going through the proper approval channels. One of the critical steps to optimize the procurement efforts is to reduce if not eliminate the maverick spend altogether. Cutting down 5 to 10 percent of maverick spending can translate into millions of dollars of cost savings at large organizations.

Cost savings

The success of a procurement strategy largely depends on the amount of cost savings attained. It is essential to identify whether switching vendors or suppliers could yield better prices. Also, it is important to focus on the total cost of ownership (e.g., delivery costs, supplier management, lifecycle costs, etc.) and consider the time value of money. Unavoidable cost increases such as inflation or energy prices should be taken into consideration while ascertaining cost savings KPI metrics.

Procurement ROI

This KPI metrics help you to understand very clearly whether your initiatives are adding value to your company or not. If a significant amount of money is spent on procurement efforts but if those expenses do not help the company to realize the expected return on investment, then it is best to cut down or take corrective actions to realigns such spends.

Purchase order cycle time

Purchase order cycle time is a KPI metrics that help companies to measure how quickly the purchase orders can be placed. Top companies typically take only five hours—about half business day—to send a purchase order to a supplier. The quicker a purchase order is placed, the more efficient and agile your organization will be.

Total spend by vendor

This KPI metrics is highly beneficial for procurement teams. This metrics helps to identify how many suppliers the company is depending on and the deals made with each vendor. By consolidating the number of vendors you work with, you increase the chances of lowering costs by sourcing materials and services in a more affordable fashion.

Contract compliance

During procurement, companies enter into contracts with several vendors and suppliers. It is essential to keep track of whether the prices paid are as agreed upon, the parties meet the standard of service-level agreements signed, and the quality standards are adhered to or not. The closer a company gets to 100 percent contract compliance, the better.

Cost reduction

Procurement managers often fail to track the efficiency improvements that can be made to reduce the cost of labor associated with procurement. This KPI metrics helps to understand ways to reduce the overall cost of procurement by eliminating the need to hire additional staff.

To know more about KPI metrics to consider to improve your procurement analytics

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Tag: centralized procurement

Top 5 Procurement Challenges Impacting Businesses in 2018

TOP PROCUREMENT CHALLENGES

Effective risk management

Procurement Consulting Market: All You Need to Know

Regional market

Pricing outlook

Cost drivers

Negotiation strategies

Industry best practices

Read more about the market outlook of the procurement consulting market along with procurement insights, pricing models, supply market insights, and market innovations in SpendEdge’s upcoming report on the global procurement consulting market.

Increasing Health Awareness Amongst Consumers Driving Demand in the Global Cardamom Oil Market

Adoption of Automation Driving the Demand in the Stackers Market

Factors Hindering the Growth of the Global Rapeseed Oil Market

Threat from disease and crop infection

Wide range of available substitute

Adulteration and contamination

Health and safety issues

Use of Methylene Chloride as an Extraction Solvent in Food Industry driving the demand in the methylene chloride market

Growing Demand from Automobile Industry Driving the Demand for Electric Motors

Top 5 Countdown – The Best of MRO Supplies and Services Vendors

Sonepar

Ferguson plc

Rexel

Wurth Group

W. W. Grainger

Increase in Number of Financial Regulations Driving the Revenues in Forensic Accounting Services Market

Procurement Analytics: 7 KPI Metrics You Need to Track

Maverick spend

Cost savings

Procurement ROI

Purchase order cycle time

Total spend by vendor

Contract compliance

Cost reduction

To know more about KPI metrics to consider to improve your procurement analytics

Related posts

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