Kronos Group

How can procurement process outsourcing offer a competitive advantage?


In an increasingly competitive business landscape, leveraging strategies that can give you an edge over the competition is a necessity. 

As a core business function, optimising your procurement function offers unique advantages that can reduce costs across the supply chain, heighten efficiency in goods and services delivery, enable product innovation, manage supplier risks, and enhance efficiency in the supply chain. You can double up on these advantages with procurement process outsourcing so that there is a clear answer to the question “should you outsource your procurement activities?”. 

So what does procurement process outsourcing offer your business? Procurement expertise, improved demand and risk management, optimised operational costs, and streamlined supplier management processes. If you are considering outsourcing your procurement functions but are having trouble choosing the right procurement outsourcing partners, procurement consultants will be able to offer you guidance.

The business landscape is getting increasingly competitive and businesses that hope to carve out a place for themselves must leverage every advantage they can. Procurement process outsourcing is a promising avenue for businesses to pursue in this endeavour.

As a core process for many businesses around the world, procurement plays a considerable role in business success. As such, optimising the procurement function can offer long-term returns.

Procurement optimisation allows businesses to craft the ideal portfolio of suppliers in line with their short and long-term strategic objectives, enabling efficient procurement processes that enhance the adaptability of the supply chain and reduce costs.

This creates a competitive advantage for businesses in the form of a reduction in costs across the supply chain, heightened efficiency in goods and services delivery, innovative products, mitigated supplier risks, and enhanced efficiency of the supply chain.

While optimising procurement processes internally facilitates all these advantages, there is a more potent way for businesses to achieve these efficiencies. Procurement outsourcing offers businesses all these benefits along with the added advantage of delivering them for a fraction of the cost and resources.

Should you outsource your procurement activities?

There are 3 broad categories of procurement outsourcing services that you can leverage for your business through outsourcing providers.

  1. Transactional services

Supporting day-to-day buying processes, like purchase orders, which ensure compliance for preferred suppliers.

  1. Tactical services

Supporting the management of low-level tail spend and spot buys and assisting internal category managers.

  1. Strategic services

Supporting and managing strategic sourcing projects and category management services.

If you have not already, there are a slew of reasons you may want to consider outsourcing your procurement functions.

If you do not have a dedicated in-house procurement team, outsourcing your procurement activities is a cost-effective way to achieve your strategic objectives.

If your procurement team is lacking resources or failing to deliver on targets, procurement outsourcing is a great choice to relieve them of the stress of performing low-value-added activities, allowing them to focus on more strategic, high-value processes.

If you lack the analytics and insights into the procurement function to make informed decisions that support long-term strategic objectives, procurement outsourcing providers can help you set up effective processes with their expertise.

If you are expanding your business and are in need of a scalable procurement solution that can deliver on newly formulated objectives, procurement outsourcing providers can offer highly scalable and flexible solutions.

What does procurement process outsourcing offer your business?

Coupled with the above scenarios, procurement outsourcing offers a significant competitive advantage. Here is how.

You can leverage the outsourcing partner’s expertise

Procurement outsourcing providers are generally highly experienced in their industry and can lend their expertise to you, enhancing your procurement function. Therefore, when choosing a procurement outsourcing partner, make sure they are and have been active in the industry you are operating in.

You can improve your demand management

Procurement outsourcing providers offer a variety of services to optimise your supply chains, significantly improving your speed of goods and service delivery. This allows you to respond to changing market demands and user feedback promptly, supporting the business bottom line.

You can optimise operational costs

Procurement outsourcing providers allow you to cut down on labour costs and overhead costs associated with maintaining an in-house procurement team. This reduces the overall operational costs of the business, driving profitability and contributing to long-term strategic objectives.

You can streamline supplier management

Procurement outsourcing providers will offer dedicated teams to take over the task of supplier management. Their expertise contributes to a more smoother supplier management function. This also frees up your internal resources to focus on more value-added, strategic business processes.

You can enhance risk management

Procurement outsourcing providers also include procurement professionals who have a high level of expertise in risk identification, assessment, and mitigation, further enhancing the resilience of your supply chain. This ensures that minimal operational disruptions take place as a result of overlooked risks.

Gain a substantial advantage over your competitors by outsourcing your procurement processes

Procurement process outsourcing is ideal for businesses that have no established internal procurement teams or teams experiencing trouble with achieving their set objectives. Additionally, it is also valuable for businesses that have no analytics or insights into their procurement processes or are unable to scale procurement processes in tandem with their growth.

In such situations, procurement outsourcing offers procurement expertise, improved demand and risk management, optimised operational costs, and streamlined supplier management processes.
These scenarios combined with the benefits offered by outsourcing procurement processes create a unique competitive advantage that businesses can use to gain an edge in today’s cutthroat market. If you are having trouble choosing the ideal procurement outsourcing partner for your business, procurement consulting services can help you assess your business and industry requirements in depth and offer strategies for outsourcing.

Julie Brand

A part of Kronos Group’s team since 2018, Julie is a leader who has honed her specialisation in business transformation and utilised her expansive financial expertise to power business strategy and add value to what we do. She has amassed experience (Pfizer, Sony, AXA, SMEC, Tradelink) all over the world in strategy, project management, analysis, and supply chain.