In order to acquire the goods, suppliers, and services that are needed for success, any business must have a solid procurement strategy in place.This procurement strategy needs to be streamlined, efficient, and cost-effective.
Yet, 60% of procurement professionals cite that they have no digital strategy in place, falling behind with the advances of technology. By updating your business’s current strategies or implementing a clear digital strategy from scratch, you can achieve optimum results and significantly reduce bottom-line costs.
Finding the right suppliers, establishing strong bonds with your chosen suppliers, and continuing to analyse the effectiveness of your suppliers can be a daunting task.
However, there is a simpler way! What if you could hire someone who delivers those essential goods and services for your business and manages the related supplier relationships, costs, and risks for you? That’s where outsourcing comes in.
Why should your business consider procurement outsourcing as a solution? The benefits of outsourcing are numerous. Let’s explore three ways that you can streamline your your procurement strategy by outsourcing.
1. A Single Point of Contact
A recent survey by DeltaBid discovered that 18% of procurement professionals struggle with managing supplier relationships and evaluating their performance, and a further 30% of CPOs say that supplier-related issues cause their biggest headaches.
One of the major benefits of outsourcing is that you only have to deal with a single point of contact, rather than juggling multiple suppliers on a daily basis.
This single contact will take responsibility for ensuring your sustainability policies are met from start to finish, will oversee quality control, and will meet the required deadlines that fit within your budget. With one point of contact, you only need to manage and nurture one relationship; this person will communicate with you throughout to ensure everything runs smoothly.
Therefore, outsourcing can save you time and hassle when it comes to overseeing your suppliers and building relationships and, more importantly, maintaining these relationships. The same survey found that 25% of companies hope to restructure their supplier base, but outsourcing reduces the need for companies to take these actions themselves. With all of this in mind, your procurement strategy can automatically become more efficient through outsourcing.
But, What’s the Price of Outsourcing?
If this sounds too good to be true, you may be thinking that outsourcing comes with a large price tag. In fact, many businesses do consider that outsourcing can be more expensive than managing it all yourself, but that’s simply not the case. APQC found that for every $1,000 (£714) spent in purchases, businesses who choose to outsource only spend $1.32 (£0.95) more than those who don’t.
Furthermore, many procurement management companies offer even more competitive prices, because they have built lasting relationships with their suppliers and handle larger quantities of stock than singular suppliers do. A few extra pounds is more than worth it to remedy the hassle and indirect cost of managing an escalating number of suppliers.
2. Time Management
With outsourcing, since you’ve only got one supplier to manage, this will instantly cut down on the time spent communicating with and overseeing your suppliers. You’ll reduce the number of on-site visits required, phone calls and emails made, invoices being sent, and other general admin tasks.
If you’re one of the 88% of procurement professionals who lose time due to invoice chasing with suppliers, outsourcing could be the answer. With one supplier – who manages their suppliers – you don’t have to worry about sending out multiple invoices, tracking down payments, and ensuring all elements of your supply chain are in order.
Meeting time sensitive deadlines shouldn’t be an issue either. You don’t have to worry about a supplier not being able to source or deliver the product you need for your project next week, because your outsourcing company will be able to mitigate such risks. If you do encounter difficulties with supply and demand, your outsourcing company can draw from any number of their suppliers to deliver what is required.
The future of best business practice lies with sustainability. Meeting your own business’ sustainability goals can be difficult, though, if your suppliers’ goals do not align. In fact, 81% of procurement professionals believe that it is vital to ask suppliers about their sustainability efforts. Since consumers now demand ethical practice as a matter of principle, your business should factor in such environmental policies when looking to streamline your procurement strategy. But, this can be incredibly difficult when working with a vast number of suppliers.
By outsourcing an area of your supply chain, you’ll have full transparency about all of the suppliers that your outsourcing company handles. Ensuring the company you outsource to holds the ISO14001 accreditation means there’s no need to worry about your suppliers’ commitment to ethical and sustainability standards.
Furthermore, as well as sustainability transparency, you’ll also be able to have full transparency when it comes to the quality and expertise delivered by your outsourcing company. Considering 79% of supply chain enterprises point to manual processes for causing a lack of supply chain visibility, it’s important to find a company that is ahead of the competition; a company who utilises the latest technology to improve quality and mitigate risks.
Although you may consider outsourcing to be a process that loosens your control over your supply chain, it actually offers a solution to streamline your procurement strategy and have a tighter rein over every factor.
This is crucial as your business begins to grow and encounters new demands. Working with an outsourcing company offers peace-of-mind and insight from experts who will help you achieve your end goals, whilst meeting your budget. With only one relationship to manage, outsourcing offers the chance to cut down on the time spent managing suppliers and increase transparency.
Looking for More Ways to Streamline Your Procurement Strategy?
When it comes to your procurement strategy, making sure everything is functioning as efficiently as possible can be time-consuming and costly. In our latest eBook, The Four Stages of Procurement Savings, you can find out how to identify the right suppliers for your business, negotiate contracts, and reach the best outcome to meet your needs and budget.