Top purchasing challenges and how to overcome them

Purchasing or procuring is the strategic process that involves choosing a suitable supplier or vendor, calculating the stock needs, handling budget, negotiations, appropriate payment terms, raising purchase orders, improving supplier relationship, timely payments and etc.

It is one of the process where retailers spend more money. That indicates, a tiny error in this procedure can impact the business lot. However a perfect plan and execution of a plan can reduce a loss in business.

Before finding a solution, you must know about common challenges faced by retailers in purchasing.

Buying far above your budget limit

If you purchase the goods above your business budget due to poor stock tracking, communication gap, not knowing needs or any other reasons, you wasting your money. Sometimes purchasing the goods without knowing the market price of the goods may lead you to spend more money on the specific purchase.

Not understanding your store needs

Most common mistake in purchasing is not knowing the needs of your store. Both above or less quantity purchasing than the store needs can lead you to the business loss. When you purchase more than the store needs, you end up wasting the goods due less sales. Also when you purchase less than the store needs, you lose sales opportunities of the specific goods.

Errors made by people in purchasing

Common mistakes from humans are failing to track the purchase orders properly i.e ordering the same goods which is already pending in PO, ordering a single items from different vendors leads double payments, Failing to maintaining stock audit, not updating a damaged items in inventory will leads inventory problems that will create a problems in finding the exact quantity of items store needs.

Human errors, such as invalid items or quantities in purchases, deficiencies in invoice against order, or unclear payments, can degrade quality and delay the a whole purchasing.

Unplanned purchasing habits

Other mistake retailers commonly do is purchasing goods without proper planning due to less stock, sudden demand of goods or last moment stock analysis. These factors forces retailer to go for sudden purchasing without any proper plan.

In a unplanned purchase you may end up purchasing low quality goods from wrong supplier with high cost, So it will lead your business to business loss.

Suggestion for avoiding purchasing challenges

Purchase, like all other operations, is one of the most important in the retail industry. Any error or mistake in the purchasing process can have an impact on business. However, like all other challenges, purchase challenges have solutions. Find a few of the solutions listed below to avoid the challenges encountered during the purchase process.

Make plans in advance and proceed purchase

Keep a close eye on your inventory, conduct regular stock audits, manage minimum and maximum stock quantities for goods, track stocks and sales daily, raise purchase orders for goods before they reach the minimum level, track all pending orders, track yet-to-be dispatched goods, communicate frequently with suppliers to track pending orders, and review appropriate stock and sales reports. Reviewing all aspects before making a purchase will eliminate or reduce any challenges in the purchasing process.

Automate all relevant elements

Raising purchase orders using reorder system will reduce the time and improve the accuracy in business. Raising purchase order based on the pre-defined formula like minimum and maximum level, sales quantity between period, sales quantity from last purchase, reorder the same last order will help you to raise the perfect purchase order with minimum time and more accuracy.

Track, analyse and get better

Track purchase and sales regularly, analysis the performance of a supplier, check the quality of goods for every purchase and analysis the price and margin from supplier for each purchase and have knowledge with price and margin so that you can negotiate the cost in future with same or other suppliers.

Detailed research on the suppliers

Before selecting a supplier, investigate about the supplier using your public network, check their ratings, reviews and margins and etc. After you’ve chosen a supplier, maintain your transactions, payments, and communications open between the two parties to avoid any legal or commercial problems that may come. Develop a positive relationship with your suppliers and request that they prioritise timely delivery to your shops.