We’ve seen a certain boom over the last 10 years, sensible organizations of all sizes are admitting the need to outsource procurement.
So why would companies choose to outsource their procurement and their product sourcing?
The overarching reason we’d assume is that the organization will achieve its overall strategic objectives better through outsourcing. The outsourced service will reduce costs and add direct value – “Bottom Line” benefits.
Let´s look at some of the main possibilities:
Expertise – Most companies don’t have the internal expertise or focus to source the best deal. Communicating around the globe can be daunting and very time consuming without having the network of manufacturers and factories that expert procurement companies have. ‘We have indirect spend or low priority categories that will never get the internal attention that they possibly deserve’. An outsourcer can bring that focus. What is currently a low-priority category for the client may be taken on by a highly skilled outsourced professional who can drive better value/lower costs?
Technology and Process – Even the very large organizations don’t have the budget, expertise and time to make their own investment work. An outsourcer with the transactional management, longstanding contact / supplier chains and other technologies already all set up and in place can reduce the costs and improve efficiency.
Costs – An outsourcer can run procurement cheaper than most companies could do internally. There would be very few companies, large and small, that wouldn’t benefit from savings on staff costs – particularly where there’s a large element of transactional processing where very little can be automated.
Control – If we asked an organization to state the cost spent on sourcing a certain product, we’re unlikely to get an accurate answer. It’s very difficult to manage internal spend in a controlled and governed manner. An outsourcer will help to control internal budgets and keep spend focused on the important parts.
It is in fact a combination of the ‘Focus’ and ‘Control’ drivers that are at the top of the list. Control is a strange one – in theory there’s no reason why an organization couldn’t drive compliance within an internal team. But in reality, no doubt it is the external contract that will force the organization into appropriate behaviour.
Our team at Innovolo we have been sourcing products from around the globe for the last 20 years and are experts in finding products that our clients aren’t able to source, or don’t have time to.
We have developed strong bonds with factories all over the world and our staff and agents are constantly on the lookout for new products, partners and processes. This means that we are confident that we will be able to source or manufacture most products that our clients request.