Top Three Ways Outsourced Procurement Saves Businesses Money
Although procurement is not always a core competency within a business, it is one of the most demanding aspects of any business. If a business’ procurement processes are ineffective, research and production can be brought to a halt. Even worse, the company could end up not being profitable.
This is why outsourcing procurement should be a serious consideration for all businesses. On top of expediting purchasing processes and getting the best deals, outsourced procurement can save you money. Below, we have highlighted three ways outsourced procurement saves businesses money.
1. It allows staff to focus on research and product development
Many companies, specifically startups, and smaller companies, will task particular employees with procurement responsibilities. Often, startups and smaller companies do not have the resources to create procurement departments or to hire dedicated procurement employees. Even if they do, they usually don’t have the in-house knowledge to properly oversee the procurement staff and determine the effectiveness of the in-house procurement.
This can cause significant problems that slow down productivity. For example, busy or inexperienced employees may forget to order essential products or order too much or too little of something, slowing down business for weeks at a time.
Outsourcing procurement allows companies to reduce the amount of time their researchers and scientists spend on doing work that isn’t their primary area of expertise. Most importantly, they save money by having procurement professionals expedite processes, guaranteeing that researchers and scientists have what they need to enhance research and increase product development.
2. It is more cost-effective than having in-house procurement staff
It may sound appealing to hire in-house procurement staff. This does not often prove to be a cost-effective method to address procurement, though, for multiple reasons.
In order to address all aspects of your business’ procurement needs, a company likely needs more than one employee. The costs of hiring internal purchasing agents include salary, benefits, taxes, office space, computer, relevant software, and more will be a significant investment.
This also means undertaking the process of multiple hirings and onboardings. Businesses lost money during the acclimation period. It typically takes upwards of a year before new employees catch up and become efficient at their jobs. Additionally, there is almost no way to predict the costs that come from inefficiencies due to inexperience.
If your company grows, procurement demands will inevitably grow beyond the ability of your current staff and the costs of managing procurement in-house continue to rise.
Outsourced procurement resolves all of these issues before they start. Businesses that hire outsourced procurement save money that they would have spent on recruiting and training multiple employees and have ease of mind knowing that they have a team of procurement experts addressing their growing business’ needs.
3. It provides access to procurement experts
Efficient procurement requires a level of expertise and attention to detail that procurement specialists take years to acquire. It involves conducting thorough research, overseeing logistics, finding lower costs for goods and services, developing vendor relationships, streamlining inventory, and an experienced management team.
Outsourced professional procurement experts look for savings opportunities everywhere they can. It is their job to study every angle of your business to help you save on operational costs.
Outsourced procurement professionals will analyze your current suppliers, the number of supplies you order and actual usage every month. They will also determine the quality of the supplies, based on their vast experience working with a variety of suppliers, and negotiate the best price for the supplies.
Interested in learning more? Speak with one of our procurement professionals about how you can save your business money.