When I graduated from university and moved into my own place, the only house I could afford was right near a manufacturing plant. At first, I thought living in the industrial part of the city would be a nightmare, but it actually turned out to be fascinating. I quickly developed an interest in industrial equipment and supplies, and spent many evenings walking around the factories to get a better look at what was going on inside. Since then, I've moved to a quiet part of the city, but my interest in industry never waned. Since I don't have the luxury of being able to visit the industrial district anymore, I thought I'd do the next best thing--start a blog about it!
As companies grow, it becomes harder to develop and refine their procurement strategy due to the big number of suppliers that have to be managed. This article discusses some of the benefits that you will enjoy when you decide to outsource the procurement function of your company.
One Contact Point
It can be hard to nurture and sustain your company's relationship with its suppliers if those suppliers are numerous. It is also hard for you to evaluate how each of those multiple suppliers is performing in relation to your procurement strategy.
Procurement outsourcing services remove the need to deal with many suppliers. Instead, you only have to deal with the entity to which you have assigned the procurement outsourcing function. It will therefore be easy for you to nurture your relationship with that single point of contact in order to constantly fine tune your procurement strategy.
Time Savings
The removal of the need to deal with multiple suppliers results in massive time savings. For example, the number of phone calls which you will need to make in order to keep supplies reaching your company in time will reduce drastically. The time which you will devote to other administrative tasks, such as sending out orders and processing invoices, will also reduce significantly since the entity handling your procurement functions will look into all those administrative tasks on your behalf.
The reduction of the time spent dealing with various suppliers means that you will need less labour to be allocated to procurement issues. The money that you save on labour can go towards meeting the cost of the procurement outsourcing service provider.
Transparency
Clients are now paying more attention to the sustainability credentials of the companies that they do business with. It can be hard to meet your sustainability goals if you are dealing with numerous suppliers whose commitment to sustainability varies from one supplier to another.
Engaging a procurement outsourcing entity can create transparency on sustainability issues since you can simply provide the sustainability goals which each supplier must meet or exceed in order to work with you. The outsourcing entity will undertake the task of ensuring that those goals are met by conducting site visits or using any other mechanism which can help them to ascertain that those suppliers walk the talk of sustainability.
Contrary to what some companies may think, procurement outsourcing actually gives you more control over your procurement processes since you will be freed from the mundane aspects of that function so that you can focus your energy on the big-picture aspects of procurement strategy development and improvement.