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Key Challenges Companies Face in Direct Procurement Management

Today, organizations are increasing their focus on financial processes and are designing strategies to reduce indirect spend. However, the value of such strategies and solutions are limited to industries where indirect spend is less than the direct spend, as direct procurement management involves a different set of requirements. 

Direct procurement management is an extensive process that entails multinational suppliers, lengthy lead times, and heavy reliance on logistics. Direct procurement management also requires extensive collaboration among different parties to manage the supply chain. It has a greater impact on organizations’ customer retention, as failures in supply chain management and product delivery affect customer experience and loyalty, as well as business success and growth. Therefore, in this blog, we have highlighted the key challenges that companies face in direct procurement management.

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Challenges in Direct Procurement Management

Complex supply chains

The supplier base for direct procurement is usually much wider and complex when compared to that of indirect procurement. This puts valuable goods at stake and increases the possibility of process inefficiencies. Factors like supply chain movement, supplier base health, and brand value play a critical role in direct procurement management.

In addition, direct procurement process requires companies to engage with suppliers directly for placing orders and sharing forecasts. This involves multi-tiered supply chains making it even more difficult for companies. 

Improving visibility into all supply chain processes will help organizations track their shipments and keep the production going. Also, gaining supply chain financing will provide access to capital when required and maintain the efficiency of the supply chain and the supplier base.

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Globalization has been a critical factor in transforming the way how organizations have been managing their procurement. Global direct procurement management requires businesses to manage an expensive and diverse supply chain that operates across different borders. More touch points are needed to gain accurate data in real time for the efficient flow of goods. In addition, shipping orders across borders entails extensive documentation to clear customs, as well as requires detailed coordination between organizations, trading partners, and even local governments.

The complexities further escalate with the involvement of a range of business partners, the types of transactions, and the flow of financial assets. To gain detailed insights into the direct procurement and indirect procurement, request more information here!

Logistics management

In direct procurement, a long term financial planning is imperative for a successful supply chain. Although logistics do not have much role in indirect procurement processes but in direct procurement management, it directly impacts customer experience and business success. Proper management of the extensive amount of data among different parties is must to ensure that the suppliers are packing, producing, and shipping orders correctly to ensure the safe delivery of products in an efficient manner.

Visibility into inventory, purchase orders, shipments, and payments, will help in developing a robust supply chain. Also, improving transportation procurement will enable companies to prevent goods shortages and build a positive customer experience.

Wondering how logistics management can impact your supply chain. Get in touch with our experts for better insights.


6 Best Steps to Build the Perfect Procurement Management Plan

The modern business environment has grown increasingly competitive and much hype has been placed on developing a procurement management plan to achieve that competitive edge, says an industry expert at spendedge.

The procurement management plan can be a complicated one. Inputs from all the departments and functional areas of an organization are required for the perfect procurement management plan. There should be a procurement management team in every organization, which sets the procurement direction that is in line with the business strategy. The team will then use the data to develop and implement a perfect procurement management plan.

Building the perfect procurement management plan



4 Major Types of Procurement in the Construction Industry

The choice of the procurement process is vitally important to the success of any construction project. Also, the type of procurement that companies in the construction industry choose is a major deciding factor of their overall profitability and is vitally important to the success of any construction project.  Construction companies compare various types of procurement and opt for an ideal one based on key parameters such as topography, logistics, weather, available technology, finance, labor availability, and services. Before looking at the types of procurement, it is important to be acquainted with functions are carried out in the construction industry and the parties involved. Generally, five functions are undertaken in a construction project – design, build, management, finance, and operation. Furthermore, the main parties involved in a construction contract include the client, consultant, and the contractor.Request Demo_SE

Types of procurement

Traditional procurement

This is one of the most basic types of procurement where the responsibility of a contractor is limited only to build. All design works and management of contract are carried out by a consultant or an engineer. The fact that the construction industry has been working with this method for a long time is its main advantage since it has established parameters that have been laid out for assessing the value for money of this type of procurement path. However, the poor influence that the contractor as an operational party has over the design cost involved, and risk allocation are considered to be the main disadvantages of this approach.

Management contracting

Management contracting is one of the important types of procurement in the construction industry. In this approach, in addition to the client, the consultants and contractors and specialized contractors become a participant. The contractor acts as a manager for the project whereas specialized contractors undertake the real build aspect in their specialized field. Finance and operation are carried out by the client in such projects. This method is adopted when there are possibilities to identify projects in packages.

Design and build(D&B)

In this type of procurement, the same contractor is meant to design and construct the project, meaning that a closer collaboration is required in the process and all risks are allocated to the contractor. The design and build responsibility is usually covered by the contractor. The consultant’s scope is only limited to the management of the contract. The client is responsible for finance and operations.

Joint venture or partnering

The barriers between parties often could result in major problems in the construction contract. In order to overcome barriers, different parties must establish a working environment based on trust, mutual objectives, teamwork, and sharing risks and rewards. The success of such types of procurement largely depends on a memorandum of understanding between the parties involved. Identifying responsibilities of each party is slightly difficult in the joint venture procurement system.

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Procurement Research Report on the Global Barley Market Now Available from SpendEdge

Barley is used as an ingredient in various health foods, cereal products, and processed foods and with the growing health awareness and changing consumer lifestyle the demand for barley in on a fast pace.

LONDON: The procurement research report on the barley market is an indispensable part of SpendEdge’s agro commodities and raw materials category portfolio and offers an in-depth assessment of the key factors influencing the supply market, procurement decisions, pricing models, and procurement best practices. Furthermore, it also offers an in-depth analysis of the supply chain management, key market developments, and demand-supply shifts to help sourcing and procurement experts make smart procurement decisions.

The demand for malted barley from the beer brewing industry is expected to be a major growth driver for this market during the forecast period. One of the major reason behind this demand is the growing craft beer industry which is driving the demand for the market under focus, especially in countries such as the US and other western countries.

“To mitigate risks such as inflexibility in buyer-supplier relationships and interruptions in product delivery due to capacity and production constraints of suppliers purchasing managers prefer to engage with multiple suppliers,” says A Kowshik, an agro commodities and raw materials industry procurement research specialist at SpendEdge.

Purchasing managers find it challenging to obtain barley that matches the requirements for end products such as malted barley. This has resulted in increased transportation and shipping costs for purchasing managers to source quality products.

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This procurement report on the barley 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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What’s Driving the Inventory Management Software Market Towards Perfection?

Throughout the history of inventory management, there has been some form of inventory management mostly limited to manual counting methods.  The advent of bookkeeping did help the inventory management process by bringing in order and structure. However, stock validation still required time-consuming physical counts. The capabilities of a modern inventory management software to digitize the process surpasses all other legacy systems by exponentially increasing its efficiency. In addition to that, thereRequest Free Sample have been constant innovations in inventory management software that is driving the efficiency of organizational inventory and logistics management. Here are the top trends in the inventory management software market:

Increasing Use of RFID Technology

The advent of RFID technology has taken over the barcodes due to its ability to track vital product information at a much faster rate. Also, RFID technology can automate the inventory management process since the product need not be in proximity to scan. Organizations are progressively replacing barcodes with RFID tags to facilitate real-time inventory tracking to enforce better SCM.

Integrating Big Data Analytics with Inventory Management Software’s

The modern inventory management systems generate a substantial amount of data including product code, price, date of purchase, lot number, and revision number. Apart from inventory management in the warehouse, the rise of e-commerce has led to the generation of huge volumes of unstructured data that cannot be processed using conventional analytics. The capability of big data extends to the analysis of large volumes of data to recognize hidden patterns that can accurately forecast customer demand.

Cloud-Based Inventory Management System Bursting onto the Scene

Cloud-computing has empowered the small businesses to harness the power of modern inventory management systems because of significant cost savings opportunities and convenience. Additionally, it also gives the organization the flexibility to scale the system parallel to their business growth.

IoT and Automation

IoT largely eliminates the company’s inventory problems by providing improved connectivity and real-time analytics solutions. Using interconnected networks of sensors, phones, computers, and other systems, IoT can transfer all product information with the help of RFID tags and transmit the data to cloud-based inventory management software. This could radically change the way companies currently track their shipments by giving up-to-date information on the item regarding its location and condition. Furthermore, the inventory management process can also be automated as sensors in the warehouse can detect depleting inventory levels.

Read more about the trends in the inventory management software market along with supply market landscape, pricing, and procurement insights in SpendEdge’s upcoming report on the global inventory management software market.
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CRM Software: Giving a Digital Edge to Procurement Processes

With procurement leaders diligently looking for ways to seamlessly bring together suppliers, stakeholders, and internal channels on a common platform – digital solutions have emerged as the best remedy to stay competitive in the procuring process. One such highly useful digital solution is the CRM software. Geared towards managing activities like identification of prospective sales leads, automation of the sales process, as well as enhancing vendor-customer relationships – the CRM software employs tools like data mining to enable strategic procurement of goods and services.

CRM software: Building and managing customer relationships

Customer engagement and customer management are the two critical aspects of every business. In fact, they act as major game changers and are often the main reason for the growth or decline of several businesses. This is why it is essential to a keep a constant track of customer behavior and make changes to your sales and marketing strategy accordingly.get in touch

By taking aspects such as customer data, customer interaction, contracts, and client & customer support into account – CRM software cuts down the customer response timelines and enhances the overall decision-making process. Also by providing an inclusive and real-time view of sales activities in a single dashboard, CRM provides enhanced sales intelligence to the procurement teams.

CRM software and digital edge to the procurement process

Buyers prefer suppliers who have moved ahead of spreadsheets, paper, and related manual processes to cloud-based solutions. With most CRM software being cloud-enabled, businesses find it easier to approve supplier contracts, take quick procurement decisions, and reach out to their client base in a prompt manner. The software being highly customized, industries like real estate, pharmaceuticals, education, travel & tourism, hospitality, healthcare, and IT find it easier to adopt CRM in their day-to-day activities.

Major names in the CRM software industry like Salesforce, have built their own unique internal solutions that allow buyers to gain a customized package depending on their industry-specific requirements. Such solutions not only make the entire work process easier but also adds value to the procurement process. Apart from quick turnarounds, CRM software provides real-time tracking of your campaigns, enables better compliance to policies, is cost-effective, and most of all very convenient to implement.

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Shield Your Procurement Against Cyber Threats

The procurement team in any enterprise deals with large amount of data that is confidential and of high importance to the organization. Thereby, making it more important to have a cyber security measure in place to secure this valuable information. Procurement is the bridge between the organization and its vendors – and the onus lies on them to choose the right suppliers, negotiate, and get the best possible price. Top supply chain professionals have emphasized on the importance of the data security standards for the suppliers and the organization itself.

Why Procurement Needs Cyber Security?

The recent cyber-attacks – Petya and WannaCry ransomware – brought businesses to a halt and disrupted supply chain processesget in touch across the world. Ultimately, it acted as a wakeup call for organizations across the world; thereby, driving growth in the global cyber-security market. These recent cyber theft attacks have changed the misconception and the laid back attitude towards cyber security and information technology (IT). Supply chain professionals have identified the fact that the organizational data that are sensitive and prone to data thefts and can damage the brand image and reputation, expose trade secrets, business practices, and supplier related data.

Protecting Procurement from Data Theft

Cyber security is a real problem and an ever-growing threat to global organizations, thus, making it a critical pain point to be dealt with on priority. Cyber security tools and solutions help organizations to identify potential supply chain risk factors and loopholes within the business processes and systems and take necessary actions and mitigate risks. A business should integrate a trusted cyber security solution to maintain not only the confidentiality of their information but also ensure vendor and client security. Companies can take the following measures to design a strong cyber security infrastructure to minimize cyber theft risks

  • Procure cyber security solutions and services from vendors with high credibility level and a trusted security certification. The organization should ask itself one question, “Is our procurement strategy, cyber ready?” before purchasing a security solution and plan accordingly
  • Implement cyber security measures and mechanisms across the organizations systems and processes
  • Develop a framework and security procedures to prevent unauthorized and unsolicited access to data
  • Regularly conduct security audits to measure the effectiveness and efficiency of your IT and security measures
  • Integrate security measures into your purchase requisition and vendor management tools
  • Encourage your vendor and suppliers to adopt security measures, assist them integrating their business processes with a robust security framework

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10 Important Findings from the Corporate Clean Energy Procurement Index

The 2016 Corporate Clean Energy Procurement Index, released in late December 2016 by Clean Edge on behalf of the Retail Industry Leaders Association (RILA) and Information Technology Industry Council (ITI), is a ranking of all fifty US states on how easy it is for American brands to obtain or procure domestic renewable energy for their operations and practices. The index uses 15 indicators across three categories: Utility Purchasing Options, On-site/Direct Deployment Options, and Third-Party Purchasing Options.

This index is important for making predictions and drawing conclusions about the state of procurement in the US and worldwide, and for a brand to determine where best to procure energy and set up their businesses, make procurement decisions, and choose the best and safest methods and areas of operation. Here are 10 of the most important insights and findings from the index:

  1. Wind is now the second most popular source of energy in five states, Kansas and Iowa included. Almost half of all states now count wind, solar energy, or geothermal energy as one of their top three electrical generation sources; this number has risen significantly (from zero) in the last decade.
  2. Iowa is the leader with the highest and most favorable overall index score of 74.73, followed by Illinois and New Jersey. Iowa and Illinois both have strong scores in terms of deployment and policy indicators. Iowa is also the top scorer in the Utility Purchasing category, largely thanks to roughly 548 MW of wind power agreements that MidAmerican Energy has with both Google and Facebook. These agreements represent 3.32% of the total generating capacity in Iowa.
  3. State taxes or tax hikes across the US on renewable energy generation can act as potential barriers to its widespread adoption and procurement, keeping the ranking of certain states low. Utility rates and overall energy costs, especially for solar energy adoption, can also act as barriers holding back state initiatives and overall progress.
  4. Though in this report only five states—Nevada, New Mexico, North Carolina, Utah, and Virginia—received points for having green tariffs or riders, this number is likely to grow in the future. Twelve states currently have mandatory green purchasing requirements, and an additional 35 have utilities that voluntarily offer this, which are beneficial options for small companies in regulated markets. However, these options may not satisfactorily meet all companies’ needs, especially not large companies who need to push back against high electricity costs effectively.
  5. Texas, Illinois, and North Carolina are, to date, the only three states that have had a direct corporate purchase of an offsite renewable generation project. In Illinois, this purchase was IKEA’s 2014 acquisition of Apex Clean Energy’s 98 MW Hoopeston Wind project.
  6. Texas ranked highest in terms of the Third-Party Purchasing Options category, with 1.9% of its total state capacity coming from off-site, corporate-funded, renewable power purchase agreements (PPAs). All of these PPAs are for wind farms. In terms of percentage, Oklahoma, at 3.22%, is number one in third-party renewable PPAs; Texas is second with 1.91%. Fourteen other states also scored points for deployment through this indicator for the Third-Party Purchasing Options category.
  7. In 2015—for the first time—corporations in the US procured more wind power through PPAs than utilities did, and corporate PPAs have doubled every year since 2012. Corporate PPAs allow renewable energy developers to better compete with the retail electricity rates that corporate customers pay for, leveling the playing field somewhat. However, the differences in the types of corporate PPAs available require understanding and attention to seize their benefits for corporate clean energy procurement fully. Companies need to decide, based on their own business, industry, and financial needs, whether a physical or financial PPA is the best fit for them.
  8. The use of solar energy is gaining momentum with corporate customers who are increasingly installing solar panels, grids, and other forms of solar energy technology on rooftops and corporate campuses to help them reach their renewable energy targets. Half of US states received points for on-site solar procurement, and a dozen more have some onsite solar deployment but not enough for a measurable impact in this index.
  9. The top eight states for corporate on-site solar deployment are California, Hawaii, Nevada, New Jersey, Maryland, Connecticut, Massachusetts, and North Carolina. Though the five states on the East Coast have lower solar resources than those in the West, favorable solar and renewable energy policies have allowed them to flourish.
  10. There is a growing need and demand for suitable energy storage solutions that the market must meet in order to encourage the growth of renewable and clean energy procurement. Policy initiatives across the US are working to improve the accessibility and availability of energy storage deployment, including new storage mandates in California, Massachusetts, and Oregon.

These findings are essential for determining the potential that the future for renewable energy procurement, procurement outsourcing, and energy procurement services and solutions in the US and makes it easier to predict how renewable energy will fare in other parts of North America and around the world. As renewable energy continues to grow and gain importance in the US, businesses will have to decide how best to procure renewable energy, where to get it, and how best to benefit and profit from its use.

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Top 10 Procurement Trends for 2017

Top 10 Procurement Trends 2017

To view an updated version of this blog, visit: https://www.spendedge.com/blogs/top-10-procurement-trends-2018

Procurement is quickly evolving in response to changes and advancements in technology, personnel and hiring requirements, consumer demands and concerns, and business practices. Here are our top ten procurement trends that are set to bring on transformation in the near future:SE_Demo2

  1. Big data will become a bigger part of procurement and will help facilitate procurement decisions, form processes, and choose suitable procurement solutions. Additionally, big data and artificial intelligence will work together to revolutionize the speed and overall efficiency of the supply chain and procurement processes. The use of machine learning algorithms in conjunction with big data will result in time and money savings for companies
  1. Decentralized buying will continue to decline while more companies will adopt and establish procurement departments to improve their spending decisions and profits. More companies will begin to prioritize relationships with suppliers and contractors and embrace the procurement process as a whole more efficiently and enthusiastically
  1. Agility of procurement processes will increase as a result of technological advances and as a result of improved relationships between suppliers and businesses, and between procurement teams and other parts of businesses. Companies will also want to increase their speed to meet increasing consumer demand to remain competitive in their industries
  1. Increased transparency due to social media and the prevalence of social data will require companies to be more accountable for their practices and actions, and will also give them a greater channel of communication with established and potential customers. The companies can then modify their processes and make procurement decisions based on what will ensure customer retention, sales, and overall success
  1. Sustainability will become a bigger part of companies’ procurement solutions and strategies. Procurement management and functions will extend to creating sustainable and environmentally-friendly supply chains, partnerships, and agreements that are also economically viable. As more Millennials and young professionals become involved with procurement, the impact on both environmental and economic sustainability is expected to increase due to their openness to innovation and their different views on economics.
  1. Ethics will also be prioritized in response to widespread consumer concerns and demand for ethically sourced products. Companies will be expected to use ethical ingredients, materials, and methods of sourcing and delivery.
  1. Innovation will increase across the board, becoming the newest way that companies gain a competitive edge against one another. Companies will become more open to taking some risks and seizing unconventional business opportunities as a way to differentiate themselves and break out of repetitive industry traditions that do not bring them their desired levels of success. Innovation will also have to peacefully co-exist with established industry priorities like cost reduction
  1. Risk assessment and management will undergo changes to accommodate innovation, the evolving technological world, and volatile political and global events such as Brexit. Companies will implement risk management practices and strategies that encompass total risk exposure as well as other factors like threat management, risk transfer pricing, and relationship risk assessment
  1. Collaboration and cooperation between companies and their suppliers to improve or create procurement services and other services will be on the rise, shifting the focus to value, quality, and team efforts. Collaboration is a good way for companies to get the best value for their money, improve relationships with suppliers, and decrease costs over the long term
  1. The people involved in procurement will have a significant impact on the transformation of the industry in the near future. More Millennials are entering the workforce and are helping change the way that businesses and procurement strategies operate. Additionally, more companies are hiring staff based on their soft skills rather than degrees and past titles, and are also hiring from unconventional (for procurement purposes) backgrounds such as education

Procurement is changing rapidly to keep pace with the evolving world around it, and its future looks bright. These expected changes to procurement will increase job opportunities, efficiency and productivity, customer loyalty and trust, and businesses’ overall profits and success.

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Top 10 Procurement Trends in 2018

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