5 Biggest Challenges in Procurement and How to Overcome Them
Key takeaways
Procurement has transformed from a basic clerical role into a strategic business function influencing overall performance.
The modern procurement process involves multiple structured steps—from identifying needs to payment and documentation.
Key challenges include risk management, outdated manual processes, lack of centralized information, vendor inefficiencies, and invisible spending.
Inefficiencies in procurement can impact cost control, compliance, and supplier relationships.
Automating procurement workflows helps tackle these issues by bringing transparency, speed, and accuracy.
Tools like Cflow enable organizations to digitize and streamline procurement without technical expertise.
Procurement has evolved from handwritten logs in ancient Egypt to a critical strategic function in today’s enterprises. But despite this evolution, many businesses still face persistent challenges that slow down progress and inflate costs.
If you’ve ever struggled with delayed approvals, inefficient vendor management, or invisible spending leaks in your procurement process, you’re not alone. These pain points are common across industries, often rooted in outdated manual workflows.
Left unaddressed, procurement inefficiencies can lead to compliance risks, rising operational costs, and missed growth opportunities. In a competitive market, even small delays or poor vendor choices can ripple into big consequences.
This blog breaks down five of the most common procurement challenges—along with how businesses can overcome them using automation. If you’re looking to modernize your procurement function without needing coding skills, keep reading.
Table of Contents
The history of challenges in procurement dates back to 3000 BC when the Egyptians used scribes to handle material procurement and supply. From then to now, the procurement process has undergone a massive transformation.
5 Common Challenges in Procurement
The procurement process started off as a small part of the business operations and is now regarded as a strategic function that enables business excellence.
According to a Markets and Markets report, the Retail Sourcing and Procurement Market is poised to grow to 4.83 billion by 2022 at a CAGR of 13.4% during the forecast period of 2021 to 2022.
Evolution of the Procurement Process
The need for procuring goods and services has been there as long as humanity existed. The very first instance of procurement was when Egyptians used scribes to record the material and manpower requirements of any project on papyrus.
1800:
The procurement function gained organizational-level importance in the 1800s when Charles Babbage recognized the need for “materials man” in his book “On the Economy of Machinery and Manufacturers”. The procurement function gained importance during the Industrial Revolution when its strategic contribution to the railroad industry was recognized. During the World Wars, the importance of procurement was diminished to a clerical role.
1960:
During the 1960s, the procurement function regained its prominence as a strategic business function. Material management, competitive bidding, and the need for trained procurement professionals were the key trends that emerged during this period.
1980:
Supplier competition and management were the key focus during the 1980s.
1990:
The modern-day evolution of procurement began in the 1990s when procurement officers looked at long-term business relationships and contracts with vendors.
Present:
The modern procurement process is a key contributor to business excellence. Procurement managers perform a wide range of functions from developing solicitations to working with vendors. The role of the Chief Procurement Officer (CPO) is as important as that of the CEO or the CFO. The integration of modern technology with the procurement function equips businesses to keep pace with increasing global competition and changing consumer needs.
Steps in the Procurement Process
Procurement management focuses on managing and optimizing organizational spending. The procurement function encompasses the following steps:
- Identifying organizational needs: The organizational needs are usually submitted by various departments as requests to the procurement department. Once submitted, the consolidation of requests is done by the procurement department.
- Review and vendor selection: Based on the review of various requests, appropriate vendors are chosen. Price quotes are requested from the chosen vendors. Vendors are reviewed based on their track record, cost, quality and speed of service, and reliability.
- Purchase requisition: Once the vendor has been identified, a purchase requisition is submitted for approval with details on the vendor information, price, quantity, and description of items required.
- Generating purchase order: Once the purchase request has been approved, a formal purchase order is submitted to the vendor. Establishing long-term vendor relationships is done through a supplier onboarding process.
- Order processing: Once the goods are delivered, the vendor submits an invoice which is to be approved within a stipulated time.
- Payment: The final step is the payout of the invoice.
- Documentation: The entire procurement process must be documented with appropriate receipts and invoice copies.
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Challenges in the Procurement Process
The evolution of the procurement function opens up a myriad of responsibilities for the procurement officer. From a straightforward identify-negotiate-purchase process to a strategic business function, the procurement function is ridden with numerous challenges.
The common challenges in procurement are:
- Risk management: The procurement function is riddled with risks such as non-compliance, invoice fraud, and sourcing risks. Legal and internal compliance issues are a risk to the procurement function. A centralized and transparent supply chain management can mitigate such risks.
- Process inefficiencies: Following obsolete, conventional manual procurement processes affect the efficiency of the procurement function. Manual processes lead to errors, bias, and delays.
- Lack of information: Access to updated information helps procurement officers make informed business decisions. Lack of access to centralized data can affect the analytics, planning, and execution of procurement decisions.
- Vendor management: Vendors play a key role in the procurement function. Managing vendor relationships efficiently helps in meeting the critical quality and price demands of the organization. The absence of a system to take care of vendor evaluation, onboarding, monitoring, and optimization leads to chaos and failed procurement.
- Invisible spending: Indirect or invisible spending outside the established procurement processes needs to be identified and addressed in order to curb organizational spending. A procurement process that has visibility into these indirect spending is a must for all organizations.
Overcoming the Challenges in Procurement
The challenges in procurement listed in the above section point out the need for doing away with outdated, manual processes in the procurement function. Modern procurement functions require the speed and accuracy of automation. Automating the procurement process not only brings speed and efficiency into the process but also enables centralized cloud-based workflow management.
Cflow is reliable, accurate workflow software that can automate procurement processes within minutes. No, you don’t need to be a technical expert to automate your process workflow. Our easy-to-use visual form builder helps anyone design and build a workflow within no time.
Overcome the challenges in procurement with our innovative and intuitive workflow solution. Reach out to us to know more.
Frequently Asked Questions
1. What are the biggest challenges in procurement?
The most common challenges include risk management, inefficient manual processes, poor access to data, vendor management difficulties, and invisible spending that goes unnoticed outside formal workflows.
2. Why is procurement important in business?
Procurement plays a strategic role in cost savings, compliance, supplier relationships, and overall operational efficiency. A well-managed procurement function drives business success.
3. How can procurement risks be reduced?
Risks like fraud, non-compliance, and sourcing issues can be minimized through centralized, transparent workflows and procurement automation tools that enforce consistency and control.
4. What is the procurement process flow?
The typical procurement process includes identifying needs, selecting vendors, generating purchase requisitions and orders, processing orders, payments, and maintaining documentation.
5. How does automation help procurement?
Automation eliminates manual errors, speeds up approvals, enables real-time visibility, improves vendor coordination, and helps manage spending effectively.
6. What is invisible spending in procurement?
Invisible spending refers to purchases made outside the defined procurement process, often undocumented or uncontrolled, leading to unnecessary costs and a lack of accountability.
Related Articles:
- Modern Procurement Process – Better Business Outcomes and Informed Purchase Decisions
- Procurement Software Application – A Must-Have Element for Business Success
- Procurement Strategy – Pathway to a Building a Sustainable and Robust Procurement Function
- Top 6 Trends in Procurement Technology in 2025
- Role of Procurement Automation in Efficient Business Operations
- Reasons to Invest in Procurement Solutions
- Building a Solid Procurement Strategy with Procurement Management Plan
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