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FOCUS ON STRATEGIC SPENDING
Outsource Procurement refers to the practice of enlisting an external third-party entity/ org to handle the administration and delivery of the procurement service.When companies opt for outsourced procurement teams, they can immediately tap into the knowledge and support of experienced procurement specialists. This approach eliminates the need to develop an entirely new internal team, along with the time required for that team to establish its structure, processes, and expertise.
WHEN TO CHOOSE OUTSOURCE PROCUREMENT ?
- When companies lack internal capabilities but desire swift access to procurement efforts (such as cost reduction, supplier management, and contract oversight).
- When companies have internal procurement expertise within their departments but seek to outsource specific areas, such as indirect materials and services.
- When companies view Procurement as a non-core, non-strategic function and wish to delegate its management to a procurement service provider.
- When companies aim to rapidly develop a procurement function to achieve savings, with a willingness to cultivate this function internally over the medium term eventually.
DIFFERENT TYPES OF PROCUREMENT OUTSOURCING:
- Direct procurement: Direct procurement is the acquisition of raw materials, goods, and services required for production. These transactions typically involve bulk purchases from a pool of trusted suppliers, aiming for the best balance of cost and quality. For example, a manufacturing company might outsource its direct procurement to a third-party supplier that can source and deliver the raw materials it needs to produce its products.
- Indirect Procurement: Indirect procurement centres around sourcing services and suppliers crucial for the day-to-day operations of a business. These goods and services cater to internal stakeholders, such as business units and functions, rather than external customers. Examples include services related to marketing, shipping, IT, and HR.
BENEFITS OF OUTSOURCING PROCUREMENT
- Reduced Supplier and Invoice Workload: Outsourcing procurement can significantly lessen the burden of managing suppliers and processing invoices, potentially reducing this workload by as much as 80%.
- More time for strategic purchases: Outsourcing can free up businesses’ time and resources to focus on more strategic purchases. The process can be beneficial to businesses that need to focus on their core competencies or that need to make quick decisions about procurement.
- Access to procurement resources: Outsourcing procurement can give businesses access to the procurement resources they need, such as expertise in strategic sourcing, contract negotiation, and supplier management. This can be helpful for companies that need more in-house expertise to manage their activities effectively.
- Establishing an agile procurement function: Outsourcing can help businesses to develop an agile procurement function that can quickly adapt to changes in the market. This can be helpful for companies operating in industries subject to rapid change.
- Improved focus and efficiencies: Outsourcing specific tasks within your procurement department allows your team to focus on other tasks. With external experts managing supplier searches and contract talks, your team members can reevaluate their responsibilities. This opens up the opportunity for them to concentrate on other essential sourcing projects or central strengths.
ALLOW THE EXPERTS TO HANDLE THE PROCUREMENT
Outsourcing emerges as a powerful solution to unburden your business from the complexities of procurement while enhancing efficiency and strategic focus. By entrusting essential tasks to external experts, you gain the freedom to channel your time and resources towards core priorities. Whether it’s the pursuit of optimal prices from suppliers, reducing fraud risks, or cultivating an agile procurement function, outsourcing provides a pathway to attain these objectives.The journey towards outsourcing procurement is your key to unlocking efficiency, strategic prowess, and substantial savings. To explore this transformative possibility further, contact the Refteck team of experts for a complimentary consultation. Let us partner with you on a journey to optimise your procurement processes, safeguard your resources, and drive your business toward tremendous success.
RELATED EXPERTISE
Tail Spend management
Are you looking for ways to save money and improve your procurement strategy? If so , tail spend management is definitely something you should consider. Tail spend is the money that your organisation spends on low-value, high-volume purchases. It typically makes up 80% of your transactions but only 20% of your total spend. That means even a small percentage of savings on tail spend can greatly impact your bottom line. For example, if you can reduce your tail spend by just 10%, you could save millions of dollars per year. Yes, you read that correctly! Continue reading to learn in-depth!
Indirect procurement
We at Refteck are dedicated to helping your company achieve procurement excellence through our unique indirect procurement solutions. We provide specialised solutions that unleash the actual potential of your organisation since we have a thorough awareness of the evolving business environment. Our entire scope of services allows you to save expenses, improve operational effectiveness, and forge enduring supplier partnerships. Learn how Refteck may be your strategic partner as you travel the path to successful procurement.
Invoice and supplier base reduction
Reducing the number of suppliers you work with and the number of invoices you get is known as “invoice and supplier base reduction.” By effectively managing bills and strategically modifying their supplier network, our revolutionary method enables companies of all sizes to streamline processes, reduce expenses, and increase productivity.
Total cost of ownership
In the fast-paced landscape of today’s business world, cost reduction and operational efficiency are more crucial than ever. But achieving smart spending involves a crucial change in how we look at things – it’s about moving beyond just the starting price and digging into something called Total Cost of Ownership (TCO).