Procurement outsourcing & how it can benefit your business

Procurement outsourcing – is it worth considering?

Procurement outsourcingYour company may be looking toprocurement for business reduce its overheads or perhaps now is the time that you want to give more attention to the core aptitudes of your business.  This is known as “procurement outsourcing”.  By recruiting the help of a procurement team this permits organisations to focus on other aspects of their commerce and thus benefiting from skilled & knowledgeable specialists.  Outsourcing to such a group of individuals averts the necessity of you having to generate a resource team in-house therefore saving you vital funds long term.

This service offers an invaluable solution for businesses who 1) want to explore the possibilities of cost reduction, new suppliers and contract managements; 2) has little or no experience in specific area(s) and wants to engage with persons who have expert awareness of the specified area, or 3) who simply do not want to employ or establish a team in-house for this function.

Procurement outsourcing is becoming increasingly more recognised worldwide by global industries who use the expertise of procurement companies to cater for requirements ranging from the delivery of marketing material through to sourcing reputable supply chain partners for the storage & distribution of goods.  There are two main divisions of procurement and these are direct procurement and indirect procurement.

  • Direct procurement refers to items bought by the business which immediately enter into their production process. Using the fashion industry as an example, materials would be a significant direct procurement category.
  • Indirect procurement refers to goods and services that are sourced by a company to enable its every day function. Utilities such as gas & water, marketing related services and IT services for applicable hardware & software.

Having decided to take the route of outsourcing your procurement necessities you should primarily evaluate how your business is performing in current times.  Establish your company’s accomplishments over recent months and investigate exactly how outsourcing will profit your organisation.  There are many Procurement Services Providers (PSP) out there and it is vital you build a relationship with the company/individual that best fits you and your business.  Do your research, don’t feel obliged to sign agreements with the first PSP you meet with.  Outsourcing procurement is a huge deal to the future of your corporation and therefore you must feel confident in the PSP you employ.  Don’t be shy to ask for evidence of their previous experience and case studies of their work.  Enquire as to the longevity of their relationships with other companies that have utilised their services.  You are looking for a PSP that has built up several years of providing comprehensive spend management services to a wide range and number of companies.  Request confirmation of their success record together with having sight of a solid balance sheet and growth plans.  An established highly skilled PSP will not have an issue presenting you with this information nor be offended at the request.

How can outsourcing procurement benefit your business?

Aside from the obvious benefit of cost reductions within your outsource procurement for your business needsorganisation, outsourcing procurement can also assist with the improvement of your existing systems and procedures.  Engaging with a PSP also gives you contact with extremely skilful procurement professionals who can aid you with services that your current internal departments perhaps cannot.  These skilled professionals will have access to an extensive network that would be solely beneficial to your company.  These individuals are more often than not proved to be completely worthy of their role and show complete focus and determination of achieving the desired KPI (key performance indicator).

As with almost everything, there is the chance that employing a PSP could also have a downside.  In the case of procurement outsourcing this can be the worry that your business will lose the control it currently maintains from having an in-house resource.  Although having said that, this one negative often proves to be far outweighed by the positives and therefore many business owners ruminate that the loss of control in-house is a sacrifice worth making.  Especially considering the benefits that a PSP can bring to the table including continuous fresh concepts to reflect the most contemporary procurement developments.

Another form of outsourcing that many businesses express an interest in, is the supply chain logistics for their goods.  Whether you are looking for a company to deal with the entire A to B of your products or simply just require some additional warehousing space, Whichwarehouse has an established network of third party logistic providers who all have the expertise and experience to deal with all your supply chain needs.  Services covered can range from handling the distribution of your products to the end users or the complete handling of all documentation required for the import and/or export of your goods, to the receipt, reworking, labelling, storage and other value added services.  Each 3PL provider can offer as little or as much assistance as you require of them.

If you are considering looking at the options of a 3PL provider to see how it can reduce your overheads, and indeed, assist with possible improvements of the flow of your products from manufacturer to consumer, contact us today on 0800 1707 555 and we will be pleased to listen to your concerns and expected requirements before carrying out a (no charge) search of our extensive network of members to find the best solution for you.


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