Outsourcing procurement to reliable service providers helps stakeholders run their business smoothly and efficiently.
The Business Process Outsourcing (BPO) industry has indeed evolved all throughout the years. Outsourcing has helped companies in different sectors to strengthen their competitive edge in the industry. These days, a good number of organizations routinely hand over some of their daily operations to outsourcing providers.
Procurement is one of the emerging outsourcing services that is slowly becoming known in different sectors in the market industry. Larger sized companies are primarily the ones that outsource this kind of service. A lot of companies that outsource their procurement processes view it as something that will require the same amount of expertise as they have.
What is procurement outsourcing?
Procurement outsourcing refers to businesses that subcontract specific procurement processes, like supplier management and sourcing. This kind of outsourcing practice requires dedication, critical thinking and decision making skills.
Further, the procurement process itself is classified into two types:
Direct procurement
Direct procurement pertains to all the purchased goods, raw materials and services that a company utilizes for production. All these purchases are made constantly and in large quantities from different suppliers. One example of this is businesses in the food and beverage industry, since they purchase supplies and ingredients for their daily operations.
Indirect procurement
Indirect procurement refers to the purchased goods and services that are needed to keep the business running. However, these purchased goods and services do not directly play a part in the company’s bottom line. Examples of indirect procurement are equipment maintenance, buying of office supplies and acquiring of services.
What are the advantages of outsourcing procurement?
Procurement outsourcing is perfect for business organizations that are product-based. Outsourcing procurement to reliable service providers helps stakeholders run their business smoothly and efficiently. In addition to that, this outsourcing practice helps with the following:
Save on costs
Procurement outsourcing allows companies to cut down on overhead costs. Instead of hiring in-house employees, they are able to work with industry experts specializing in procurement solutions at a lower cost.
Have wider access to resources
Procurement specialists have access to a wider pool of suppliers both locally and internationally. This means that businesses will have a good chance of choosing the best supplier and having greater deals for their product needs.
Improve productivity
Outsourcing procurement processes enables organizations to streamline their workflow and overall daily operations. Further, employees and stakeholders will also be able to focus more on other important matters of their business.
Easily adapt to procurement trends
Outsourcing providers are fully equipped with the latest technology. Procurement outsourcing providers make use of automated software solutions like an agile procurement system. This helps them track and monitor supplies, its availability and varying prices.
Procurement, if not done and managed correctly, will often result in a lot of work. Outsourcing procurement helps entrepreneurs to save on time and money, as well as on having to hire additional employees. Not only that, this helps them to run their business smoothly as their procurement is being managed by experts in the industry.
