Where outsourcing of purchases is used?
In any companies. This phenomenon is used both in big and in the medium-sized and small companies. The tasks solved in the big companies: specialization of purchasers of certain tasks, decrease in fraud, centralization of purchasing function, reduction of the price of the purchased goods etc.
In the small companies management running into the following problems: the hiring of the qualified purchasers who are expensive is necessary; one or couple of purchasers who perform this work have a lack of resources for the solution of tasks at the high level; loss of money on small volumes of purchase. From this follows, that from outsourcing of purchases such companies will have: professional purchasing services; reduction of the price of keeping the staff which isn’t performed non-key functions, good prices, big economy and many other benefits.
Due to the statistics of the country where outsourcing of purchases is used for a long time, it’s reported that at a transfer of purchases of various categories for outsourcing. We can save from 10 to 40% of the economy depending on the category. According to the data of the Horses for Sources, the main players on the international market of the outsource are Accenture, IBM, Procurian, GEP, and Infosys. They can help their clients improve financial characteristics. Moreover, the annual increase in the market of outsourcing of purchases for several last years is equal to 12%.
Outsourcing has a sure place in the five of the main strategic directions СРО and practicing buyers due to the Future of Procurement made by SAP Ariba и Oxford Economics. It leads to the development of the outsourcing of purchases year-by-year.
As declares Gartner in 2018, thanks to the maximum robotization and automation of process for Business Process Outsourcing (ВРО, outsourcing of business processes) 50% less workers are necessary.
Outsourcing of the company can provide such services lowering operational expenses and cost of the offer.
Main ways of the purchases (“Business processes”):
- Source-to-Contract (S2C): a strategy of sourcing, management of the indicators of the expenses including purchases and tendering process, selection of the supplier, wholesale purchases, management of suppliers.
- Procure-to-Pay (P2P): processing and creation of PO (purchase order), processing of document flow, and processing of accounts, development and training, management of accounts payable. In case of transfer of purchases of various categories to outsourcing, from 10 to 40% of the economy according to some category are reached on average (sometimes even more).
How to manage the category?
- Non-key indirect expenses: service of offices, logistics and business trips, IT, constructions and buildings, telecommunications, etc.
- Non-key direct expenses: packing, repair (including capital), fuel, and support.
Such processes and categories can be added. We introduced just some similar categories.
Due to the statistics about the outsourcing of purchases, we think about rare advanced companies. Besides, a few years ago directors of the procurement didn’t discuss this subject and didn’t support on the directed to a certain subject and creative events. Now the СРО have more understanding of advantages in the use of outsourcing of purchases.