7 Reasons Why Outsourcing Procurement Services is Exactly What Your Business Needs
If you’re in a product-based business, procurement is key to your success. It’d be tough to manufacture all your own parts and materials. In some cases, it might even be impossible. Either way, things run much more smoothly if you can work with other reliable companies to supply the parts and materials needed in your business. Finding those suppliers and working with them is the job of the procurement department.
Though procurement is vital for companies, coming up with an effective procurement solution can be a hassle. As your business grows and procurement becomes more complex, it can quickly turn into more work than you and your existing employees can manage in the time you have. One solution is to hire more people. However, that’s going to cost your company money as well as time to train new employees. It’s not necessarily going to solve all your problems, either. Procurement outsourcing services are an alternative solution that might be a great fit for your company.
Why Outsourcing Can Be Better Than Hiring
If you’re noticing issues in your procurement process, just having more people working there won’t automatically simplify the process or solve the problems you’re facing. If there are issues in your procurement process, then you’d need to overhaul your system as well as hire additional help.
One solution to problems in procurement is to automate the procurement process through a Software as a Service company. This can be a great choice if you want to keep your procurement in-house but outsource the process automation. However, that solution still means you’ll need people working in the procurement department. If you’d rather focus on doing something else instead of worrying about whether or not your procurement system is working, there’s another solution that might work better for you.
To avoid difficulties associated with in-house procurement, you can outsource your procurement solutions. Letting another company handle your procurement system might seem odd at first. You know what your company needs, and it isn’t unusual to want to stay in control of procuring the supplies essential to your business. But using procurement outsourcing companies to outsource procurement doesn’t necessarily mean you’re losing control. It also comes with quite a few benefits. Keep reading to discover seven reasons why outsourcing can be better than do-it-yourself procurement.
1) Choose Your Level of Control
When you’re looking at the possibility of outsourcing procurement, there are a couple of things to consider. The first option is that you can outsource all your procurement so that a third-party outsourcing company handles the purchases for you. With this option, you also get to decide whether to outsource all your purchases or to only outsource your non-core spend and keep more sensitive procurement in-house.
Another option is to outsource your procurement management system to an online Software as a Service program that is easy for your in-house staff to handle. Using online procurement software lets you retain more direct control over everyday purchasing. There are some great advantages to automating, but choosing this option means you miss out on some other advantages of outsourcing your procurement. With more direct control comes more time spent on procurement and more responsibility that falls on your employees.
If procurement is something you’d rather not have to worry about, then outsourcing is the way you’ll want to go. In this article, we’ll be focusing on the advantages of outsourcing your procurement. You can learn more about the benefits of procurement automation by clicking here.
2) Gain Procurement Expertise
The people working in your company are experts on the products you create and the services you provide. They might not be experts in procurement, though, especially if you’re trying to keep your expenses low. Maintaining a department that’s exclusively devoted to managing procurement just isn’t practical for every business. This is why outsourcing is an excellent idea.
Instead of trusting your procurement solutions to someone who’d be better suited for another job, you can turn them over to a real expert. Procurement outsourcing companies have the experience needed to give you the best possible procurement solutions. They also have the skills, resources, and knowledge to strategize more efficiently. All of this comes together to make your company’s procurements as successful as possible.
3) Lower Your Costs
You probably already know that managing procurement from within your organization can be expensive. In contrast, companies that specialize in creating procurement solutions face much smaller expenses. Instead of wasting money in-house, you could save by relying on a procurement outsourcing service provider with lower overhead costs. That lets you cut your own overhead.
In addition, you’ll also be saving money in more ways than just processing costs. Outsourcing procurement lowers costs because you won’t be devoting office space or IT resources to maintaining an in-house procurement system. You’re also cutting back in terms of headcount and training. You won’t have to hire anyone new to run procurement. You’ll also free up the employees already working on procurement so they can focus on other tasks.
Taken together, all these cutbacks lower your transaction cost per procurement. Even if the amount saved per procurement is small, it’s going to quickly add up to significant savings.
4) Return To Your Core Focus
Outsourcing means your procurement system will be handled by purchasing experts. By shifting those responsibilities, you’ll also enable the experts at your company to focus on their own specialties. They’ll no longer be distracted by tracking down the best suppliers, comparing costs, and generating purchase orders. They get to focus on value-added areas where they use their unique skills to the best advantage.
As a result of outsourcing, you’ll have more time to spend on providing better products and services to your customers. The procurement outsourcing company will take care of purchasing tasks essential to your business while freeing up your people to focus on delivering the best possible customer experience. Since you’re cutting back on costs, you’ll also get to enjoy increased profits while supplying better service.
5) Enjoy Greater Access
Procurement experts have access to supplier databases both international and local. This means that they can help you choose from among a far greater number of suppliers than you might find working on your own. They also have the contacts and market leverage necessary to make sure you always get the best deal on products you need for your business.
With this increased access, you will be able to ensure better quality and prices on all your procurements. You’ll have a whole team of procurement experts working for you, giving your company access to the best possible opportunities. And you’ll get all that without having to set up a separate procurement department inside your own company or hire additional employees.
6) Adapt To Change More Quickly
Being able to adapt to change quickly is a definite advantage in today’s business world. This is particularly true in the wake of the COVID-19 pandemic and ongoing supply chain issues. However, adapting is hard to do in procurement if you’re using a manual, in-house system. Setting up an agile procurement system using an automated software solution is one option. But this would still require your employees to spend quite a bit of time keeping on top of things.
Outsourcing will give you the advantages of agile procurement without the extra in-house work. Agile procurement responds quickly to supply chain disruptions and changing prices. It’s one of the big advantages you should be looking for when implementing a new procurement solution.
When you outsource procurement, you’re hiring a team to keep track of all these procurement concerns for your business. They’ll be on top of catching price reductions and doing their best to make sure you aren’t stuck without needed supplies if one of your suppliers runs out.
7) Streamline Productivity
When you outsource your procurement solution, all the advantages that we just talked about are going to help streamline your company’s productivity. Outsourcing lets your employees focus on using their strengths by skipping over dealing with purchasing. That helps streamline their workflow as well as company operations.
In addition, the expertise and adaptability of the procurement outsourcing company you hire allow for increased productivity and efficiency. Procurement experts can move things along more smoothly than most in-house departments could. They have a decided advantage in terms of access to information and expertise. In short, things are simply going to run more smoothly when you don’t have to worry about managing procurement.
Pros and Cons of Procurement Outsourcing Services
Though there are many great things about outsourcing procurement, there are also a few risks. For example, there may be legal or security risks if you accidentally partner with an unreliable supplier. You can avoid most potential downsides by choosing a reliable provider for procurement outsourcing.
It’s important to thoroughly vet the company you’re going to work with. Make sure you retain a reliable outsourcer that stands behind their procurement solutions and offers responsive customer service. You want someone who’s going to help you make sure your new procurement solution improves things for your company.
This is where NextProcess can help. We have a history of providing reliable business process outsourcing solutions. By outsourcing with us or using our procurement and purchase orders software, you’ll keep your data secure and streamline the procurement process. Our customer’s satisfaction and security are our highest concerns. We aim to make sure that when you choose to outsource your procurement solutions with us, it will mean increased success for your company. We’re with you every step of the way, making sure your procurement solution delivers all the benefits you’re looking for. Contact us today for more information on outsourcing your procurement!