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Managing low value one off buys

Procurement is one business function that can have a significant impact on the bottom line regardless of market conditions. In the outsourcing mantra of today, Procurement Outsourcing Services is fast gaining prominence, and has become imperative for global organization to:
• Utilize opportunities to save cost
• Streamline processes, and
• Focus on core functions of business

Procurement outsourcing spans a spectrum of procurement related sub processes (e.g. requisitioning, vendor management, invoice processing etc.), which are typically spread out across multiple spend categories (MRO, IT Hardware, administrative supplies etc.) and services multi-locations for manufacturing majors with plants located across various locations.

It is shaping up as the next big trend in supply management as businesses are increasingly turning to procurement process outsourcing as a solution. This is because:
• Aiming for creating strategic value through process improvements — quickly and cost-effectively.
• Utilisation of the latest purchasing technology (by outsourcing procurement functions) without making huge investments in software, implementation, and support.
• Availing significant cost-reduction potential through outsourcing of procurement process.

As enterprises find it increasingly difficult to train and staff their internal purchasing organizations, many are looking at procurement outsourcing as a viable alternative. investments.

A Procurement outsourcing partner (PSP) can provide:
• A thorough analysis of an organization’s spend and implement changes, negotiate with suppliers, and use proven industry best practices.
• Offers your organisation the ability to focus on your core competencies and gain access to leading external capabilities in non-core activities.
• This helps your organisation to ultimately improve procurement performance and results across all categories and activities without making large investment on infrastructure.

Thinking strategically when selecting any PSP :
• Select an Organization that has a variety of procurement product & service offerings for providing your organization with the best possible result.
• Select an Organization that has been established credentials in the market for a long time and worked as a PSP for reputed manufacturing companies and big corporates.
• Instead of contracting multiple procurement service providers, it is advisable to go for a single PSP because it helps to simplify the governance process where your organization has only one relationship to manage.
• Select a PSP who has highly improved e-procurement platform, online negotiation tool, expertise in analytics & diversified domain expertise to cater your all procurement needs.

How a PSP can help your organisation?
1. PSP will be the single supplier to your organisation.
2. PSP can help you to support your day to day spend in indirect or non-core activities with dedicated buying centre (Shared Service Centre).
3. PSP has a solution which can help client to offload two major hassles namely
• transactional processing of all low value indents, PO-issuance and up to delivery of material by individual suppliers.
• engaging with hundreds of suppliers of low value items post-PO-issuance including processing of invoices and payments to these suppliers.

4. PSP will deploy the following for your organisation:
• An e-procurement integrating with your ERP for automating the RFx transactions.
• Analytics for informative MIS & Dashboard
• Access to a large number of new supply sources
• Reverse auction as online negotiation tool for large value one off buys.

While a PSP is happy to take over the role of replacing hundreds of small value suppliers of client, your organisation becomes automatically relieved as VMI becomes the exclusive accountability of a PSP. The transactional workload of your organisation is remarkably reduced since the User-Group need not route their needs through your procurement team but has PSP to engage with.

A PSP can help by providing a customer dedicated buying centre – professional buyers who leverage cutting-edge tools and best practices to proactively manage day-to-day procurement activities, ensuring efficient transaction processing, fewer errors, and ultimately higher compliance.

Quantifiable returns for your organisation
• Transfer risk of GST input credit
• One account reconciliation
• Reduction number of suppliers
• Reduced number of transactions
• Unlocked transactional bandwidth
• Improved delivery compliance
• Reduced effort towards delivery follow-ups
• Reduction in cycle time

Authored by

Saumendu Neogi



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