5 Benefits of Procurement Outsourcing

square-peg-round-hole

Have you ever felt stuck to move forward on a project because the skills required was not a good fit for your resources?  Kind of like the square peg in round hole scenario.  Yet you knew that making it happen would be in the best interest of your organization?  Think about it for a second. How would you handle this at home if you had an electrical issue and you were not an electrician?  The possibility for electrocution is severe enough to call in experts for most people.

Negotiating goods and services outside of your area of expertise can be just as paralyzing.  Many organizations end up spending too much money due to outdated contracts because they are afraid of losing at the negotiation table or they just simply don’t have the resources to engage.  Markets, technology and your needs change constantly. But existing contracts seem to remain the same.  If companies really understood how much money they could save it would be impossible for them to ignore.

But how do you access the savings with limited internal resources. Fortunately, there’s procurement outsourcing.  Here are 5 key benefits of procurement outsourcing that can help any size organization:

  1. Expert talent

Major league baseball allows for the designated hitter (DH) who bats for the worst batter in the lineup. The result provided dramatic increases in home runs, RBI’s and created hall of fame credentials for some players.  Procurement outsourcing allows you similar opportunities to shine.  How many companies have the talent in house that can negotiate freight, utilities, financial services or maintenance contracts? Not many.  But like a DH, procurement outsourcing is there to give you access to the best expertise at your weakest position.

  1. Reduce risk

Procurement outsourcing can reduce your risk because it is only used on demand.  There is no need to keep full time staff. Use it as you need it.  By the project, short periods or if you just need expert help in negotiating a specific category in which you have little to no experience.  For example, transportation companies have full time staffs that do nothing but specialize in negotiation of transportation.  These negotiations come down frequently to highly experienced specialist on one side of the table vs little to no experience on the other side.  Who do you think wins that game?

  1. Reduction in overhead

The focus of procurement outsourcing is to provide added value through better contracts. But one additional benefit is that it reduces overhead costing too.  No need for training, insurance, office space, medical benefits and all the other employee related expenses.

  1. Increased opportunities for procurement solutions

Using in house procurement limits your solutions to only the skillsets and opportunities within your organization.  Procurement outsourcing has the advantage of having a greater vision to procurement solutions that go well beyond your organization.  Through strategic partnerships, ability to pool expert talent and the overall experience allows for the perfect environment for creative solutions that are not accessible through in house procurement.

  1. Core focus

Using procurement outsourcing allows your organization to focus on your core competency. It doesn’t matter if you are a restaurant, manufacturer or a law office.  Keeping your limited resources focused on your core business is crucial to your success.  Asking your procurement team to negotiate contracts outside of their expertise is just not a good fit.  Let them do their job and let experts handle the rest for you.

Just about every organization uses outsourcing services of some kind whether it is legal, payroll, IT or human resources.  Procurement outsourcing is just the next service frontier.  Competition is forcing companies to get leaner and more effective.  How can you ask more from your team that is already stretched thin?  Procurement outsourcing just might be your answer.

If you know of anyone that would like more information on how procurement outsourcing can be a fit for their organization please email info@atssoutherncal.com

Question:  Have you ever felt over matched at the negotiation table?

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One comment

  1. Expected Benefits:
    1) Dedicated Human Resources doing highly specialized tasks (Can be achieved by hiring and training skilled labor)
    2) Ability to complete Projects on time with better accuracy(Can be achieved by establishing achievable SLA’s)
    3) Cost Advantage (one of the primary reasons for Outsourcing)
    4) Prospective Business Partnership in a country for strategic expansion (Can be achieved by building trust)
    5) Opportunity for cost effective Procurement Solutions (Can be achieved through an alliance with a good Procurement Solutions Provider)

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