Outsourcing plays an important in the procurement’s journey towards the heart of the business. Most companies prefer to outsource their jobs because is really cheap and the cost of the outsourcing depends on the offshore location where labour is more cost effective or cheaper. When people hear the words Business Process Outsourcing Process or simply BPO, they always think of the traditional BPO model. This model has worked particularly well for Finance and Accounting, HR and Information Technology, Knowledge Process Outsourcing, low value-add tasks that could be centralised and engineered in a consistent way allowing the business to focus more closely on its core activities with the provider.
Procurement can have some elements and factors which can influence the traditional outsourcing approach but it still relies on a deep understanding of the clients and customers and their changing demands and their innovative thinking and a thorough knowledge of the supply market. The third party provider cannot simply apply a template or generic operational model and expect the same results the in-house team could achieve because those third party providers can also bring expertise and experience from within and across industries and businesses in the field of outsourcing. They can also flex this expertise when demand is higher than the usual and they can ensure the procurement team is sufficiently resourced in line with the business needs.
The Procurement staff needs to be deep category experts, change management experts, and those who know to deal with people. The third party provider needs to challenge old thinking and behaviours beacuse they need to think more holistic views of the business and bringing ideas to the customer’s table to help them improve that area but that is the difference of the traditional BPO and the procurement BPO but otherwise, there are still great strategy that a company must possess. Partnering with a third party provider who applies this approach can be the key to unlocking the door that stands between procurement and the board room.
Most companies are able to realize the significant benefit by turning Procurement’s attention from solely focusing outwards on the supply base to also focusing inwards to the organisations. This is perhaps particularly true for indirect procurement (also called GNFR or non-core procurement).
Benefits remain untapped in most companies because businesses do not have the necessary skills, and at the C-suite level, indirect procurement’s importance is often perceived as low. In fact, for most organisations it is simply too expensive to have in-house the sheer volume of people needed to cover the breadth of indirect categories, to the sufficient levels of depth of current knowledge, plus the leadership, change management, and communication skills, and of course the appropriate procurement technologies.
Businesses have two choices. Either carry on as they are, or seek an alternative way of working via an external provider. Outsourcing is really important in a certain business because it can lessen the company’s work.
Reference:
http://bx.businessweek.com/business-process-outsourcing/view?url=http%3A%2F%2Fspendmatters.co.uk%2Foutsourcings-role-procurements-journey-heart-business%2F
http://spendmatters.co.uk/outsourcings-role-procurements-journey-heart-business/
http://bx.businessweek.com/supply-chain-management/outsourcings-role-in-procurements-journey-to-the-heart-of-business–spend-matters-ukeurope/3027745725548334752-17c71ab9c01a9acfde5e304da8335faf/
http://globalizationtoday.com/outsourcings-role-in-procurements-journey-towards-the-heart-of-business-spend-matters-ukeurope/
