Delivering Value with Outsourcing Procurement
Procurement outsourcing allows companies to obtain what they need without having to manage the process of getting goods and services themselves. In order to outsource this, they must find procurement partners they trust and companies that are intimately familiar with what they need.
In this article, you can read about how outsourcing procurement works and what software is typically used in the process.
What is Outsourcing Procurement?
Procurement outsourcing is a strategy many businesses use to manage their procurement activities. Procurement is a process businesses use to obtain what they need---the process includes finding, contracting, and paying for goods and services the company uses. When outsourcing this, a company generally creates an agreement with one or more other organizations to find and obtain goods and services on the client's behalf.
Since this is a really key area of business operations for many organizations, outsourcing procurement should be done very methodically and deliberately to ensure quality remains high and the cost of operations and goods remains low enough to generate a sustainable profit.
How Does Procurement Outsourcing Work?
Typically, the company that decides to outsource procurement follows a process to select and hire a procurement outsourcing business. At many companies, this is roughly the process that is followed:
- Planning: Initially, the company decides to outsource procurement and identifies procurement functions to outsource or decides to outsource the entire department.
- Search: From there, they begin searching for the right procurement partner(s). They may post a RFP (request for proposals) to help them identify candidate firms. The RFP specifies their requirements for a procurement company and invites responses. Prospective partners file responses to the RFP that bid on the deal---these responses can be hundreds of pages long, and detail how the company would do the work and what they'd expect as compensation.
- Contract: Once the company identifies a finalist, they will probably start talking about a contract. If an agreement is reached, a contract between the two parties is signed to protect the interests of both and outline expectations and responsibilities for the relationship.
- Initial implementation: At this point, the two companies work closely together and are in frequent communication to successfully transition over to the new procurement processes.
- Renegotiation: Over time, the two might decide to go back to the negotiation table and redo the contract if something changes or they decide to adjust the agreement terms.
Generally speaking, this entire process requires extensive teamwork and close contact, as well as extensive legal and contractual coverage. Procurement is a vital business function, so the hiring company has to be absolutely sure they find the right partner to outsource to.
What Software is Needed for Procurement Outsourcing?
A variety of different types of software are used in procurement outsourcing, such as software to help with real-time management of production and software that assists with communication.
Here are a few examples of software that procurement outsourcing uses:
- VoIP (Voice over Internet Protocol): VoIP is Internet-based phone service, and it allows companies to effectively and affordably communicate at scale.
- UCaaS (Unified Communications as a Service): UCaaS is a single platform for communications, bringing together multiple communication methods so everyone can readily see communications records and compare information. Texting, phone, email, and chat are typically part of this software suite.
- Cloud storage: Many types of software used in procurement are in the cloud, including many communications software systems. Since it is stored and operated on offsite servers, the cloud storage vendor is responsible for maintaining the infrastructure and applications needed for many procurement activities.
Of course, there is also software that collects statistics, software that assists with managing logistics, and other applications procurement companies rely on in their daily work.
Getting Started with Procurement Outsourcing
Procurement outsourced has numerous advantages for businesses. It can help businesses obtain what they need without being concerned with the details of getting important goods and services for their organization. Thanks to software, procurement outsourcing and the necessary communications are even easier than ever before.
Your business has enough on its plate. Outsource what makes sense for your business, choose a world-class SaaS technology solution and focus on what's important: your clients. Call 1-866-879-8647 or fill out an online form to request a no-obligation quote from an 8x8 product specialist.