Supply chain procurement: Key challenges and solutions

Supply chain procurement can be tough for enterprises to navigate. Pair it with external forces, such as broader supply chain disruptions, rising costs, and maintaining purchasing compliance, and the situation only gets more complex. 

While some parts of the supply chain may be out of your control, you can take charge of your procurement strategy and how it fits within broader supply chain management processes. To do this, it’s important to understand the role of procurement in supply chain management and how to solve common procurement challenges. 

To save your company time and money, use the following tips for building procurement and supply chain management strategies that work together.

Procurement vs. supply chain management (SCM)

Some confuse the terms procurement and supply chain management (SCM), but each refers to a unique business process. 

Procurement is the act of acquiring goods and services your company needs from external vendors. It's a component of supply chain management, which involves coordinating the entire journey of goods and services, beginning with acquiring raw materials and ending with final product delivery to the customer.

Supply chain procurement is just one stage of the larger supply chain management process, which also involves production, warehousing, and logistics. While both processes address business goals and require proactive management, they differ in focus, scope, and desired outcomes.

How strategic procurement fits into SCM 

Strategic procurement plays a crucial role in enterprises’ supply chain management process. Buying decisions impact areas like quality control, cost, inventory, and risk management.

Effective procurement strategies help optimize supply chain performance by identifying higher-quality materials, driving cost savings, and reducing lead times. A poorly handled procurement process, on the other hand, can lead to greater spend and increased supply chain disruptions.

Supply chain strategy can also influence purchasing decisions. For example, many procurement teams use demand forecasting to help determine ideal timelines and quantities based on fluctuations in demand.

Additionally, procurement teams can track supplier performance across the supply chain to help decide which suppliers to retain or replace.

The benefits of aligning your SCM and procurement strategies

Aligning your supply chain management and procurement strategies comes with a range of benefits, including the following:

• Greater visibility: Gain visibility across the entire supply chain to identify risks and potential disruptions before they impact operations.

• Improved agility: Respond quicker to changes in markets and consumer preferences with an integrated approach.

• Better supplier relationships: Improve collaboration by developing strong supplier relationships throughout the supply chain.

• Reduced waste: Work together to prevent duplicative efforts, over-ordering, and underutilizing resources.

• Increased compliance: Standardize procedures to manage compliance with regulations and internal policies more effectively.

   

Challenges in supply chain procurement

Even though it’s only one piece of the puzzle, procurement management deals with its fair share of challenges. Here are a few that procurement professionals will likely face and practical ways to overcome them.

Supply chain disruptions and global sourcing risks

Supply chain disruptions are increasingly common due to expanding third-party failures, cyber attacks, and natural disasters. 

According to a 2024 Business Continuity Institute (BCI) report, nearly 80 percent of global organizations endured at least one supply chain disruption in the prior 12 months. Most experienced between one to ten disruptions during that period, affecting key business functions. This resulted in financial losses and negatively impacted customer satisfaction.

Solution

Using predictive procurement tools can help you forecast potential disruptions so you can plan for them in advance. These tools leverage advanced technologies, like data analytics and artificial intelligence (AI), to anticipate and proactively address procurement needs and challenges for more agile, resilient, and strategic procurement operations.

Cost volatility and inflation pressures

Procurement professionals constantly face cost volatility and inflation challenges as goods and services’ prices fluctuate with market demand, weather, geopolitical events, economic conditions, and more. These cost changes can lead to uncertainty in your bottom line and necessary pricing adjustments, which may negatively impact customers.

Solution

A diversified supplier network can make it easier to adapt to price fluctuations without significant disruptions to your business operations or profitability. By reducing reliance on a single supplier source, you become less vulnerable to price increases. 

One way to diversify your supplier network is to use an e-commerce solution for purchasing. For example, Amazon Business gives you instant access to thousands of vetted suppliers from around the world, enabling you to spread out purchasing and compare prices to get the best deals.

Compliance, risk management, and ethical sourcing

In addition to optimizing the procurement lifecycle, procurement leaders must work to meet regulatory, contractual, internal, and sustainability compliance requirements. This is even more challenging without a centralized procurement department that handles purchasing decisions across different teams or locations.

Solution

Procurement software can be a huge help by allowing you to set purchasing restrictions in line with your internal procurement policies. This ensures compliant and cost-effective purchases across all teams. 

For example, Amazon Business offers purchase controls for setting budget limits, restricting certain product categories, and guiding buyers to preferred, reliable suppliers to mitigate risk. You can also create custom approval workflows as an added layer of protection.

Procurement complexity in multi-location operations

Procurement becomes even more complex when different business locations follow their own processes. One site might have a dedicated procurement professional, while another may delegate purchasing to department heads. This fragmented approach makes it difficult to standardize procurement practices and remain compliant.

Solution

Procurement software is also essential for multi-location operations, as it’s the easiest way to centralize and standardize procurement processes. Locations can maintain some autonomy by setting up their own approval workflows while upholding consistent purchasing guidelines and restrictions. This ensures each site documents procurement activities in the same system for easy recordkeeping.

Mitigating the bullwhip effect in supply chains

The bullwhip effect in supply chains refers to the way demand information becomes distorted as it moves between retailers and manufacturers. 

For example, a retailer might see a slight increase in sales of a certain product and respond by ordering more from a wholesaler. The wholesaler, in turn, may order extra from the manufacturer, overestimating the actual demand. As a result, the manufacturer might increase production to accommodate a true surge. This can lead to overproduction, overstocking, and unnecessary costs.

Solution

E-procurement tools can help mitigate this effect. Real-time visibility into inventory levels and demand forecasting tools can help paint a clearer picture of actual demand. Additionally, effective supplier relationship management leads to open communication that allows you to share insights with potential suppliers and collaborate to align on demand signals.

Ethical and sustainable procurement requirements

Procurement teams face mounting pressure to prioritize sustainability and responsible purchasing, but progressing in this area is often challenging.

According to Amazon Business’ 2025 State of Procurement report, corporate social responsibility mandates are seen as the biggest external challenge to procurement operations for leaders, ranking above unexpected economic changes and rising costs.

Meanwhile, companies prioritizing a more sustainable value chain are seeing benefits like faster growth and lower costs due to a focus on waste reduction, giving them a competitive advantage.

Solution

The data analytics and reporting tools within procurement software enable more informed decision-making that aligns with sustainability goals. These tools can help you identify opportunities to improve sustainability in the procurement process and find preferred providers to help you reach your responsible purchasing goals.

4 best practices for building complementary procurement and SCM strategies

Building complementary procurement and SCM strategies requires proactivity, but it doesn’t need to be a major lift. Here are four best practices your enterprise can start using right now to align and streamline these critical processes.

1. Increase collaboration and shared knowledge

Insights gleaned through effective supply chain management can be helpful for procurement teams as well as suppliers. The first step is establishing clear lines of communication between procurement and supply chain departments so they can begin sharing information. 

This can be as simple as starting an instant messaging channel or scheduling regular meetings dedicated to collaboration. Regardless of the method used, the focus should be on discussing suppliers, trends, and consumer demand details.

2. Adopt joint procurement and SCM performance metrics

Use joint metrics to measure your procurement and supply chain performance so you can see the efficiency of the entire process. This is important since both pieces work together to deliver finished products or services to customers. 

A few examples of joint metrics you can use include:

• Supply chain cycle time: Measures the total time it takes for a product to flow through the entire supply chain, from raw material purchase to customer receipt

• Supplier performance: Tracks metrics like quality, responsiveness, and on-time delivery

• Total cost of ownership: Measures all costs associated with acquiring, using, and disposing of a product or service over its lifecycle

   

3. Leverage data for smarter decisions

Procurement and supply chain professionals can make more informed decisions using data analytics based on historical data, market trends, and predictive algorithms. When shared with both teams, these insights enable broader visibility that may improve decision-making.

4. Invest in training programs

Because procurement is a critical part of the supply chain, it’s important for both teams to understand each component of the process to create seamless and efficient operations. Consider investing in training programs so procurement professionals can learn more about the supply chain process and vice versa. Mutual understanding can break down existing silos and help ease communication issues.

Solve your procurement troubles with the right tools

Supply chain procurement is a complex process that requires a proactive optimization approach. But, with the right data and software, you can prompt significant changes to your profit margin that echo throughout your entire supply chain.

Amazon Business provides tools that support procurement by offering access to a broad supplier network, bulk purchasing options, and spend analytics. With features that enhance visibility and purchasing control, you can manage procurement workflows more effectively while maintaining supplier selection and cost management flexibility.

Discover how Amazon Business can streamline your procurement—talk to our sales team today.