These days, many companies are thinking about the benefits of outsourcing their procurement activities. If you run a medium to large business, is this something that you should also consider doing?
For those of you that are unsure of the right answer, this handy guide will tell you all you need to know about outsourced procurement.
What is “outsourced procurement”?
Many large firms and organizations have their own in-house procurement departments and procedures. In some cases, this works well with the organizations concerned. But for others, a radical shake-up is a must to cut costs and improve efficiency.
One of the ways that firms of all sizes can do that is to outsource their procurement. They can use a procurement services company to take care of key procurement activities. Those activities relate to sourcing and supplier management.
For some firms, outsourcing their procurement to another company is a great way of saving money. By outsourcing, they can increase their buying power without having to buy larger volumes of stock.
But what about other firms where cost-cutting is not the sole motivator? They can increase specialist skill sets in their existing procurement departments.
How outsourcing your procurement can benefit you
Most companies outsource certain operations aspects to third party companies. IT outsourcing is perhaps the biggest example of outsourcing.
Many firms find it cost-effective to use outsourced IT support companies. The main reasons for doing so are cost and the lack of office space. They also don’t need to worry about ensuring staff members are up-to-date with the latest technology.
Outsourced procurement offers similar benefits to companies and organizations of all sizes. Of course, it’s not all about saving money. You might hire procurement staff that are the best at what they do. But what happens in two, three or five year’s time?
If they have no wish to improve on their skills, it could impact the efficiency and productivity of your organization! Outsourced procurement offers access to industry experts. Their up-to-date knowledge can help you to shape the future of your business.
Outsourced procurement is results-driven
When you forge a relationship with a procurement supplier, part of the remit is that they work to specific goals. Are yours to save cash? Do you want to simplify how you buy things? Maybe both statements are just as important to you?
Whatever your goals, outsourced procurement companies will work to goals that you set them. Metrics, such as key performance indicators, ensure that they get the job done how and when you want them to.
How long does it take to set up an outsourced procurement relationship?
The answer to that question depends on the size of your organization, and what you want out of the deal. Many companies introduce outsourced procurement models over a long period.
Doing so helps them to check that the transfer process goes smooth and is an easier goal for both parties to work towards. I hope you have enjoyed reading today’s article.