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When should you consider engaging outsourced procurement expertise?

Blog / 01/10/2020

All businesses understand they can’t possibly operate without the help of third parties but the decision of when to manage requirements in house and when to outsource procurement can be a tricky one.

 

Some strategic sourcing decisions need no consideration at all; manufacturing organisations need a whole supply chain of raw materials and components suppliers to help them operate. And there is no other option in the IT Procurement space than buying in tech for items like laptops, desktops, mobile phones, printers etc with associated off-the-shelf software.

However, there are some purchases, particularly in the consultancy space, where the decision seems a much harder choice. For some organisations they do a simple comparison of day rates v internal resource costs and decide that it is ‘cheaper’ to do it in-house, whatever the ‘it’ is. This could be the case in some situations if the requirement is relatively simple and/or you have people in your organisation with capacity and the right experience.

However, for some specialist knowledge, simply comparing day rates to internal costs means you are not looking at the whole picture. Just as you buy tech from a third party because they have invested in R&D and iterated the products over a number of years to bring you a value for money performant product. So too with consultants – or the ones worth engaging anyway!

What are the benefits?

  • Expertise: They will have spent a long time building and developing their skill set, working on projects or issues like yours many times before with similar and different types of organisations, learning a lot in the process – learning they can bring to your project or activity, allowing you to get to the result either quicker or more easily, or both.
  • Market knowledge: Using internal resource may not give you access to this wider view or it might be something you would have to pay extra for. This knowledge will come as part of the package.
  • Flexibility: Brought in to complement your existing skillset, they don’t have to do everything. If you are clear about your gaps up front, you can tailor their input and deliverables so you only pay for what you need, using them where they can add the most value.
  • Objectivity: Not being part of your organisation means they can provide impartial advice based on the data and their knowledge, rather than any internal politics. They can also provide a fair challenge to your thinking and guide you in terms of best practice.

An area where this type of specialist consultancy works well is in the Commercial Services space. With internal procurement teams already stretched focusing on their existing supplier base, be it driving value from their strategic suppliers, delivering cost savings targets, cleaning up the tail spend or supporting the project roadmap, peaks in demand can be tough to manage. Engaging experts who have experience of working with the types of purchases you are making and who can plug in just where you need them for as long or short a timeframe as required, will ensure you have ‘burstable’ expertise to help manage the peak in demand.

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