Question

discuss the implication faced by the organisations in case the procurement challenges are not addressed

Answer 1

Some of the commonly faced procurement challenge and the result if they are not addressed are

Risk management of stock-out/over-stocking: If this is not addressed then the company will face issues such as stock-out or holding excessive inventory. This will result in loss of goodwill, increase in cost for inventory management and waste of resource.

Reducing complexity of supply chain: One of major contribution of procurement is towards increase of complexity of supply chain. If this is not handled then the organization will likely face various issues that stems of the complexity of the system. Issues such as delays, increasing cost, inefficient operation, and increase of waste are easily some of the possibilities.

Integration with the rest of system: Procurement refers to acquisition of raw materials, personnel and other resources for the business operation. Even though it is one of the earlier steps in the supply chain, many a times, the overall process of procurement is disconnected from the rest of the operation. If this is not addressed, it reduces the overall communication level within the organization and increases the complexity of the operation. This also causes redundant work and waste of resource.