Procurement outsourcing is the process of transferring specific procurement activities - including sourcing, category management, contract management, transaction management, supplier relationship management, or a combination of some, or all of them - to an external service provider.
In turn, a company which does so expects to increase its focus on core spend and competencies, reduce overall costs and realize bottom-line savings.
Companies are choosing to outsource only their non-core spend and non-core processes (indirect spend or overhead), as they are less critical to the manufacture and production of finished product.
Developing the Procurement Strategy
Procurement strategies often focus on areas such as cost reduction, mitigating risks, rationalising expenditure, supplier relationship management, improving processes and business efficiency, green purchasing, contract management, category management and aid legal and regulatory compliance.
Indirect Procurement outsourcing constitutes a growing trend of SME and corporate procurement strategies. In fact, research has suggested that major companies will likely expand the scope of outsourced procurement in the coming years.
Priorities change over time and strategies must be reviewed and revised to reflect changes in circumstance and focus. You may need to review how you make procurement decisions and who is authorised to make those commitments, how to maximise value, your processes for dealing with suppliers and invoicing.