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HCMWorks Insights

Why CPOs Should Consider Outsourcing Procurement

Posted by HCM Works on 6 Nov 2015

One of the biggest challenges for companies all over the world is procurement, direct or indirect. Even in a sea of goods and services, it can be impossible to guarantee that the services you're looking at are the ones your company needs. That's why more and more companies have found themselves shifting to outsourcing procurement altogether. Here are a few reasons why.

Save Money

Procurement is often the largest spend category any business has by a wide margin. It affects literally every facet of your business, so cutting costs in any way is a must, especially in an increasingly competitive market. That's why so many companies have been considering outsourcing their procurement – they've found it's not only simpler and more efficient, but cheaper as well, ensuring you get the best you can for your budget.

When you outsource to a specialized agency, you're actually gaining the benefit of their wisdom and experience when it comes to procurement. This means painstaking and constantly updated research, a critical eye for functionality and quality and proven track records. As with all things, a solid strategy is required in order to make sure you maximize your efficiency and reduce negative effects. Consider how much money is wasted searching for each service you need, not to mention valuable time. Consider instead the benefits of having experts shop the markets for you, customizing their searches based on your specific needs and budget, so you can spend more money on the things that matter most.

Save Time

When you consider all the services and commodities a business requires to run, it can be mind-boggling. You'll need to keep track of maintenance and repair, logistics, furniture and office supplies, packaging materials, IT services, travel expenses and a vast amount of other things. It takes time – a lot of it – to keep track of all of it and ensure everything is running as smoothly as it needs to. For businesses that are growing, expanding or even just beginning, it's overwhelming and hard to know where to even start looking for such a wide variety of peripherals. For large businesses, it would be time consuming to maintain visibility and control over spend, never mind reduce spend.

Procurement agencies have vast and incredible networks full of all kinds of services, right at their fingertips. Instead of seeking out each service and commodity individually, you can trust a procurement agency – if there's something you need, they already know where to find it and that can save an incredible amount of time in the long run. Not only do they find and secure services and commodities for you, they will also handle all the management – negotiations, contracts, changes in services, and more. That means you can spend less time searching for the right services at the right price, and more time focusing on the day-to-day operations of your business.

Save Resources

Even if we lay aside the issues of money expenditure and time, we have to consider the other resources expended by indirect procurement. Any employees dealing with procurement need knowledge of a great deal of things and a wide skill set to match. Not only can that be difficult to find an individual matching that criteria, but consider how many people will need to manage those commodities for you. For many companies dealing with procurement in-house, this can be a massive resource hog – resources that could be put to better use elsewhere.

By outsourcing procurement, your company no longer needs to sweat the small stuff and you can focus your staff on your company’s most critical projects. An agency also already has all the resources you require, so in a bid for efficiency, you can simply work with them and let them juggle all the peripherals for you, combining all aspects into one functional account.

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Tags: Procurement

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