The use of a procurement specialist has recently become a popular option for many businesses. We look at whether your business could save money by outsourcing your procurement.
There are two key factors that involved in effective procurement; maximising profitability and reducing costs, doing this right can literally be the difference between a successful, profitable company and a failed business. You will have to put a lot of time and sometimes money into making procurement work though. This is why more and more companies are starting to outsource procurement.
By working on behalf of many clients a procurement specialist gives themselves a greater buying power than you have as an individual company. You are then able to enjoy their increased buying power in the form of savings. As they specialise in procurement they also have plenty of experience and great relationships with suppliers that you can benefit from.
Certain companies have even more to gain from outsourcing procurement, for example a smaller company that just doesnt have the leverage to negotiate great deals on their own behalf. There are benefits for almost any company though, so you can expect to benefit whatever the current state of your business.
Some of the key benefits of outsourcing procurement include:
You can use the time you save by outsourcing to focus on more core areas of your business. Why wouldnt your business benefit from directing the time you save on the things that you are best at?
A buying group buys for many business meaning that they can negotiate bulk discounts from suppliers. Most buying groups will be purchasing on behalf of many companies with similar needs to yours.
You will be able to take advantage of the expertise of the procurement firm. Unlike your business, buying is their core focus which means that they are very good at it. No matter what your purchasing requirement, the right firm will know who the best supplier is for you. They also have expert and experienced staff that will now form your procurement department.
You will also see significant reductions in overheads compared to managing your own procurement. You will avoid the cost of hiring, training and accommodating in house procurement professionals.
The reporting provided by an outsourced procurement company is likely to surpass the purchasing analysis that you currently have for your business (if you have one.) This means that you and your management team will always have a better understanding of your companys purchasing activities.
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