Creating Value Through Procurement Outsourcing

Procurement: The foundation of any organisation, it is the essential element that will decide the success of your process.

No matter the size of your business or production plant, procurement still holds the same importance.

That is why businesses have an in-house team to tackle this.

However, even though your procurement team is skilled and independent, they might still be using spreadsheets as their main tool for managing procurement processes. Unfortunately, this approach can lead to significant setbacks and ultimately affect the bottom line—revenue.

Research shows that a typical mid-size business uses several applications for various company-wide operations. Searching for information across multiple application systems, analysing it, and manually entering data can be incredibly tedious, time-consuming, and inefficient. Even if shortcuts are in place, these processes can't easily handle large volumes of data in real-time.

Because internal systems have limited resources and knowledge, relying only on them is not a sustainable option for the growth of your organisation.

This is where procurement outsourcing comes into play.

Let's examine in detail how it improves your process.

What is Procurement Outsourcing?

The transfer of certain essential sourcing and supplier management tasks to a third party is known as procurement outsourcing. Businesses will sometimes do this to reduce costs or, often in the case of procurement, to add specialist skill sets to their procurement department.

How You Can Create Value Through Procurement Outsourcing?

Procurement outsourcing is the best way to add value to your organisation. Let’s understand how:

Make More Time for Internal Affairs :

Having an expert team by your side who will tackle the entire procurement process allows your team to focus on core business. This will enable everyone on your team to contribute ideas and expedite your main company operations.

How?

Instead of having your workforce deal with invoices and vendor negotiations all day, you focus on the manufacturing process and customer satisfaction.

Scale More Easily :

Who doesn't want to grow their company? Everyone is right, but the decision to leave your procurement to the service provider is precisely what allows your business to grow. An outside company invests all of its time and energy in finding you the finest deals and delivery windows, which reduces your expenses and boosts your profitability. This also makes it easier for you to bring on new customers and boost sales.

Get Access to Expert, High-Quality Services Without the Need for Staff Training :

When you outsource procurement, you're getting help from people who really know their stuff. They know all the ins and outs of the industry and can get you the best deals without needing any training from you. Plus, your internal team can learn a lot from working with these experts, which makes your whole business stronger.

Decreased Issues with Team Management :

Outsourcing can help ease the pressure of managing your team, but there's more to it than that! The real magic happens when your team and the outsourcing partner work together smoothly. This means talking openly, finding ways to make things better together, and sharing what we know.

When everyone communicates well and knows what to expect, teamwork gets a lot easier. By working together to find areas where things could work better, we get the best of both worlds – our team's experience and the new ideas from the outsourcing partner. Plus, when they share their knowledge with us, it's like giving us superpowers and making us feel more in charge of our work.

Select Appropriate Outsourcing Partners with Capabilities to Address Those Sources of Value :

Another key practice that you should follow to get the most out of procurement sourcing is choosing the right partner. Not all service providers are created equal, and careful selection is essential to ensure you reap the potential benefits. This involves conducting thorough due diligence on potential partners, including:

Evaluating Their Capabilities :

Assess their experience, expertise, and track record in handling similar procurement needs to yours.
Verifying Their References: Speak with other companies who have used their services to get real-world insights into their performance.

Understanding Their Service Offerings :

Ensure their services align with your specific requirements and that they offer the functionalities you need to achieve your goals.

Post Partner Selection, Define and Implement Agreements That Maximise Savings :

Finding the right outsourcing partner is just the first step. To truly unlock the full potential of this collaboration, it's essential to build a strong, collaborative partnership. This involves actively engaging with your chosen provider.

Instead of simply handing them the reins, schedule regular discussions to discuss your goals and strategy for procurement. Work together to define clear agreements on how you'll implement these plans, maximising the chances of achieving your desired outcomes. By communicating openly and working as a team, you can foster a partnership that drives mutual success and delivers significant value to your organisation.

What is the Time Frame for Implementing an Outsourcing Model?

The length of the outsourcing project and the size of the organisation will determine how long it takes in detail. Companies that use an outsourcing model typically do it gradually over an extended length of time. Throughout the implementation stage, employers generally favour testing aspects of the model bit-by-bit rather than undergoing a vast transformation programme in one go. If your company is planning to outsource its procurement procedures, this is something to think about.

Summary:

Procurement outsourcing is like inviting a new friend to help with your chores – it brings exciting possibilities and extra hands to make things easier. But just like with any new friend, there are things to think about to make sure it's a good match.

Choosing the right partner is super important. You want someone who's open and honest and who wants the best for both of you in the long run. This way, you can trust each other and work together to make cool stuff happen.

If you're not sure where to start, our team at Refteck is here to help. We'll show you how we work and make sure you're making a decision that feels right for you.