Many businesses of today are confronted with a lack of resources or a lack of performance when procuring them. But now there is a simple and effortless solution. In case you didn’t know, any company has now the option to outsource product procurement and make their life easier by letting someone else procure their needed products at great prices. Businesses operate on many departments and a lot of companies started, over a decade ago, to efficiently outsource the activity in departments such as Human Resources, Finance or Accounting. In this short article, we are going to talk about a rather new trend in outsourcing, procurement outsourcing, its advantages, disadvantages, current state and future directions.
Right now, you are probably asking yourself “Why should I hire a company to procure products?”. Well, businesses that opt for product procurement do it for two main reasons. The first reason is reducing operating costs. By transferring the responsibility of key procurement activities and management of different suppliers to a third party, they cut the costs of an entire department and are able to hire less people and invest in less activities. A second reason, maybe even more important, is having professionals with special skill sets working on the procurement department and bringing the results they need.
Many of the businesses that use procurement outsourcing view is as a great way to bring an added value to the procurement process and complement the experience they already possess in the area, similar to IT or Legal department outsourcing. This type of outsourcing is not to be confused with the outsourcing done purely to cut costs (we talked about it earlier), such as Human Resources outsourcing, which reduces headcount, thus making the company spend less on wages. Procurement outsourcing is rather seen as a great way to achieve from external sources a high level of expertise that are not justified enough (by cost or demand) to create an internal department. Moreover, these highly experienced and skilled professional often have extensive and relevant networks that help the business get the desired result at great prices and in a short amount of time. Procurement specialists have many years of experience, are very well connected and in touch with the latest trends and directions in procurement. Thanks to all these connections, they are able to close great deals and give objective and informed opinions.
Making a short online research will enable you to find a lot of great companies that specialize in purchasing and procurement, as well as in global sourcing and logistics. After you choose one of them, there will probably be a meeting in which the needs of your company will evaluated, followed by a period of research and brainstorming, in which their team will try to find the best solution for your procurement issues. After that, they will find and evaluate different procurement sources, negotiate with them and give you a final proposal. Finally, it is up to you to accept or deny the proposal. If you choose to do the latter, it is their responsibility to come up with another solution.