Common challenges in retail procurement management
Procurement is one of the most critical functions in a retail business. Retailers need to identify customer needs, analyze market trends, choose relevant vendors, manage the entire procurement cycle, and much more. Processes such as purchase order management, contract management, vendor management, goods and services receipt management, and the like are involved in procurement cycle. These processes are very complex and require a high level of accuracy. Needless to say, retailers come across various challenges during the course of procurement management.
In this article, we would share a few challenges that retailers face in procurement management and ways in which a technological solution would help tackle these problems.
1. Supply risk
Risks such as fraudulent, shipment damage/loss, cost or quality tamper, and the likes are a few among the numerous risks associated with any supply chain. Retailers also need to adhere to policies and government laws for procuring products from multiple vendors.
2. Undefined purchases
At times, employees could make purchases going outside the predefined set of purchases. Spending uncontrollably makes it even more expensive for retailers to run their business, thus reducing their overall ROI. Since these purchases are often unrecorded, identifying them also becomes quite a task.
3. Long process cycle
Procurement cycles are very lengthy - checking stock numbers, placing purchase orders with vendors, getting shipments ready and dispatching them, recording the receipt of goods, tallying against placed purchase orders, and finally processing payment are the most steps that are involved in the entire cycle. It is a time-consuming process, and often gets delayed, causing a ripple effect on all the following functions in the retail business.
4. Data inaccuracy
Data accuracy and high reliability is indispensable in the procurement process. Making purchases based on inaccurate data could lead to excess or shortage of inventory, unnecessary expenditure, and much more. This, in turn, impacts the organization’s operation.
5. Strategic procurement
Without having a solid procurement strategy in place, retailers would not be able to reap benefits from their business or earn any profits. Incorrect procurement could lead to stationary stock, added expenses, or even worse, customer attrition.
6. Supplier-related issues
For one retail business, product procurement is done from multiple vendors considering various factors such as cost effectiveness, ease, and the like. Managing and tracking data of multiple vendors and respective orders placed with each vendor are complicated.
Technology solutions would help retailers overcome all these challenges. The procurement module of Ginesys retail ERP software helps retailers set certain limits for total amount to be spent on different products, thus removing possibilities of any undefined purchases. Moreover, all the data is recorded and stored on their servers or on a cloud platform, so tracking and managing all purchases is easy and effective and there is no data loss. Since everything is automated, each procurement cycle is shorter. Reports display sales trends based on factors such as seasons, festivals, and the like. With this information, retailers are able to strategize efficiently and place orders of certain products in bulk, thus making the business more cost effective and ensuring more sales. Ginesys’ procurement module also enables users to access a vendor portal, wherein they can store all vendor data and automate vendor management. Even vendors of these retail organizations have access to this portal and can easily upload the necessary data.