Even in the wake of massive business disruption across sectors, global outsourcing is advancing as it continues to reinvent itself to adapt to the evolving digital environment. The outsourcing industry has come a long way – from handling non-core processes to more strategic work, including legal, financial, logistics, et al.
Seeing how the industry is growing, it is evident that outsourcing is not just a viable option but also delivers significant transformational business, financial and operational benefits. Therefore, procurement and vendor management processes are now making a beeline towards outsourcing to gain competitive advantage.
Procurement and vendor management costs can be notoriously difficult to contain especially for sectors such as manufacturing and trading that relies heavily on these processes for running smooth business operations. But at the same time, it has incredible potential for cost savings through better vendor assessment, compliance and governance. And one way to achieve that is through procurement outsourcing. While it is still at a nascent stage, procurement outsourcing is really taking off and here’s why:
Partnering with the right vendor through smart selection
Supplier selection, the initial phase of procurement process is key to effective and optimized supply chain and accountability. However, given the ever-expanding network of suppliers, growing globalization, evolving actors in supply chain system and its associated complexities, vendor selection has become more challenging than ever. Given the landscape CPOs’ need a holistic view of the market and supplier base to make the right and informed decision. Procurement outsourcing uses market research and intelligence to evaluate vendors and their product/service catalogues and identify the most suited vendor that can supply appropriate products at suitable terms and competitive pricing.
Mitigating risks through supplier intelligence
Procurement and supplier management services allow you to closely assess and monitor your strategic suppliers. Comprehensive supplier information not only empowers you to build a lasting and profitable relationship but also take proactive action in case of any looming threat of risk or fraud. Outsourcing not only adds value in terms of supplier selection but also brings in risk management system, improving efficacy of on-boarding and managing vendors/suppliers.
Optimizing cost and resource utilization
While procurement and vendor management accounts for a significant amount of indirect spend it is a non-core process. Outsourcing procurement enables organizations to free up resource bandwidth, enabling them to focus on more strategic activities thus improving business outcomes. In a way, it translates into optimized resource utilization and overall cost savings.
Ensuring better performance and value improvement
To ensure optimized vendor performance and streamlined supply chain activities, procurement needs to play an active role in governance. Supplier management services help monitor, track and document service levels and coordinate with the vendor to ensure better transaction and contract management and compliance. Besides, it also entails monitoring and benchmarking price lines with the prevailing market and helps ensure they are as per what was contractually agreed.
It is critical for any business to ensure process excellence to expand market reach and improve revenue. And especially for small businesses to gain competitive advantage in a global market it is vital to streamline supply chain for value improvement.
So, if you are looking for a solution to your supplier management and procurement needs, check out our Corporate Services section to know how we can help you transform your procurement process to optimize efficiency and productivity.