Eight benefits of outsourcing sourcing

Right now, you may be spending more than 70 percent of your time in managing sourcing events, handling ad-hoc sourcing requirements, query handling, conducting SRM & SPM exercises and handling escalations

Updated: Jul 12, 2018 05:53:41 PM UTC
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Procurement outsourcing has been achieving new milestones over the years, with respect to growth. Many analysts have reported a faster growth of upstream business (Source to Pay services) as a part of ‘Procurement as a Service’, as compared to the earlier focus which was on outsourcing or providing augmented support for transactional services (Procure to Pay).

If you are a category manager and are wondering how outsourcing of sourcing activities can directly impact you, then this blog is just for you. Higher spend management, savings, cost arbitrage, automation, efficiency improvements, compliance improvements and so on, are all benefits at an organisation level that accrue as a result of outsourcing that add value to your day-to-day operations as a category manager. As a category manager, you would want to spend your time on:

1. Building a strategy for each of your categories of portfolios. 2. Study the market trends and incorporate them into your category plans.
3. Manage a robust supplier management program.
4. Build on stakeholder connect and get involved in the strategic aspects of key sourcing events.

Instead you may be spending more than 70 percent of your time in managing sourcing events, handling ad-hoc sourcing requirements, query handling, conducting SRM & SPM exercises and handling escalations. Sounds familiar? With sourcing outsourced, you can experience the following benefits directly impacting you:

Keep the ad-hocs away
You can outsource all the small value ad-hoc sourcing requirements that come unannounced and take away a lot of your time. You would need to hand hold the outsourced team for a few initial requirements, post which they would be fairly independent and you would be only required to do sample checks.

Overall management and not micro management
For large sourcing events, you can out-task activities, depending on the sourcing plan. The activities may include market research and supplier long listing, supplier capability assessments, preparing RFX pack, conducting RFX event online, building supplier assessment criteria, drawing technical and commercial comparatives, performing bid analysis and so on. So, while you focus on overall management of the sourcing event, laying the ground rules, managing cross functional teams, draw an overall plan and tollgates, take key decisions, the outsourcing team can support with all the documentation, coordination and analysis.

Tapping into an idea pool
An outsourced provider has a team of sourcing resources supporting your organisation. As a process, they mostly discuss the sourcing requirements and so it’s a collective knowledge of a lot of sourcing professionals which helps in building and running a sourcing event. You get access to multiple thoughts and ideas by just reaching out to one contact point in the outsourced provider’s team.

Several outsourcing providers have a central pool of category experts, who stay abreast with category trends, and offer their expertise across sourcing projects for multiple clients, for example Infosys BPM has a Center of Excellence and Commodity councils which are focused on benchmarking best practices, trends and new markets/ innovations specific to a category- hence you get access to all that knowledge and expertise as a part of your partnering. Owing to attritions and job rotations in organisations, it is highly practical that you are handling a particular category for the first time and are not really an expert at it. This is when the access to outsourcing provider’s knowledge pool is very useful.

Fresh perspective
Outsourced team may not have handled the type of sourcing event for your organisation that you want them to conduct. This brings in fresh perspective to the event and often very useful new ideas to view the whole project in a different light.

Ability to run a comprehensive SRM program
You want to manage a strong SRM / SPM program, but often fall short of time and resources. You are not to be blamed. While the concepts, plan and methodology of SRM/SPM don’t take long, it is the implementation which is highly cumbersome and time consuming. Preparing questionnaires, getting data from systems and compiling, sending questionnaires to respondents and seeking responses, compiling information and arriving at performance scores, collation of data for periodic reviews etc., are the activities that require tremendous amount of effort. Unless you have a centralised SRM support from your organisation, all these activities take a lot of your time. However, you can get all this done through an outsourced team.

Ensuring total compliance
Sourcing processes in most organisations are governed by a set of rules and guidelines. Often, while running multiple events, compliance to rules and guidelines gets compromised, sometimes inadvertently. An outsourced partner, however, is driven by KPIs and 100 percent compliance to the process guidelines is critical. So, you can be rest assured that the process compliance would be taken care of, the audit trail would be maintained and documents repository would be in place.

Access to new tech
If technology support is a part of the offering from the outsourced provider, you get access to state of the art tools, making your work simpler and smarter. Additionally, providers deploy automation and AI based solutions to drive efficiencies in sourcing execution. Tactical tasks such as RFX creation, response collation, Bid analysis, can be largely automated. Artificial Intelligence ensures that the system learns how a particular category is handled during sourcing and when more events get executed, the output is better and smarter.

Tale of the tail
Tail spend, which often takes away a lot of time or is rather ignored, is a great avenue to generate additional savings and bring spend under management. The area has been explored a lot over recent years and providers have gained immense expertise at managing this spend. The service pays for itself through hard savings. So, it makes absolute sense to outsource this spend and get it managed by experts. You lose nothing and get benefits of savings and compliance. Moreover, AI based automation solutions nowadays, make Tail spend management much more efficient and effective.

A partner led support across Source to Pay is not a mere value add as it helps you benefit from various factors such as - access to deep category knowledge, analytics and state of the art innovative technology applications.

By Khalid Kureshi, Senior Practice Engagement Manager and Riya Nehra, Principal Consultant - Solution Design

The thoughts and opinions shared here are of the author.

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