Many companies today are faced with a lack of resources or a lack of performance when it comes to acquiring them. But now there is a simple and effortless solution. In case you didn’t know, any business now has the option to outsource product procurement and make your life easier by letting someone else purchase the products you need at great prices. Companies operate in many departments and many companies began, more than a decade ago, to efficiently outsource the activity in departments such as Human Resources, Finance or Accounting. In this short article, we are going to talk about a fairly new trend in outsourcing, procurement outsourcing, its advantages, disadvantages, current status, and future directions.
By now, you’re probably wondering, “Why should I hire a company to purchase products?” Well, businesses that choose to purchase products do so for two main reasons. The first reason is to reduce operating costs. By transferring responsibility for key purchasing activities and managing different vendors to a third party, they reduce costs for an entire department and are able to hire fewer people and invest in fewer activities. A second, perhaps even more important, reason is to have professionals with special skills working in the procurement department and delivering the results they need.
Many of the companies that use purchasing outsourcing see it as an excellent way to add value to the purchasing process and complement the experience they already have in the area, similar to outsourcing the IT or Legal department. This type of outsourcing should not be confused with outsourcing done solely to reduce costs (we discussed this earlier), such as HR outsourcing, which reduces headcount, resulting in the company spending less on salaries. Purchasing outsourcing is seen more as a great way to obtain a high level of expertise from external sources that is not sufficiently justified (by cost or demand) to create an internal department. Furthermore, these highly experienced and skilled professionals often have extensive and relevant networks that help the company achieve the desired result at great prices and in a short period of time. Procurement specialists have many years of experience, are very well connected and in touch with the latest trends and directions in procurement. Thanks to all these connections, they are able to close great deals and give objective and informed opinions.
Doing a little research online will allow you to find many great companies that specialize in purchasing and procurement, as well as global sourcing and logistics. After choosing one of them, there will likely be a meeting where your business needs will be assessed, followed by a period of research and brainstorming, where your team will try to find the best solution to your purchasing problems. After that, they will find and evaluate different procurement sources, negotiate with them, and give you a final proposal. Ultimately, it is up to you to accept or reject the proposal. If you choose to do the latter, it is your responsibility to find another solution.