Believe it or not, your company more than likely already uses some form of an outsourcing solution, such as facilities management, manufacturing services, logistics, or IT. However, most companies often overlook the idea of procurement outsourcing. With this form of outsourcing, your company would disperse specific activities that relate directly to the supplier and sourcing management to a designated third-party. This third-party would be refereed to as the procurement service provider.
With procurement activities your company outsources, to the procurement service provider, to perform a full or partial procurement for a predetermined number of categories on behalf of your company. The outsourcing could be whatever type of procurement that your company is looking for. Typically, larger companies will outsource following a strategic sourcing plan in order to gain a more conducive supplier management plan.
At the foundation of a decision to obtain procurement services is the potential return on investment that companies earn on behalf of their assets. Typically companies will have a limited number of financial resources that are easily accessible. Due to this fact, they will generally have to turn their point of focus toward investment opportunities that aggressively enhance their competitive edge.
In most instances procurement outsourcing is best for companies that are large in size and who procure indirect and direct goods on a large-scale, this is where there is the greatest potential for gain. For any company that falls into the category of large procurement, it’s important to think about outsourcing. Both small and medium-sized companies will outsource some of their non-core direct and indirect materials for procurement. This process is far from cost-effective and is time consuming because it shifts their focus from the core issues such as branding, new product launching, sales promotion, and marketing toward their procurement services.
It’s important to remember that this process does not involve laying-off the team members from the purchasing department and sending everything offshore. This process involves outsourcing strategic procurement that enhances the organization and overall core competencies of your company. With this service your company has the potential to improve it’s core competencies and gain leverage on those larger non-core activities that produce an improvement overall in performance without the need to make any investments into their infrastructure.
If your company has a large-scale procurement that is operating in several categories, it’s really important to start considering the idea of outsourcing. So what are you doing in this area?
