PROCUREMENT
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Capturing the benefits requires close and ongoing collaboration between the purchasing function and other parts of the business , which could be harder for an outsourced provider .
Iliana Filyanova , Partner for McKinsey ’ s Manufacturing & Supply Chain practice believes procurement outsourcing spans a range of activities , from strategic to transactional . “ Strategic procurement includes Source-to-contract ( S2C ) activities from market analysis and category strategy development to strategic sourcing and contracting ,” explains Filyanova . “ Outsourcing of S2C can give companies access to expertise ,
“ The pandemic may have been the most challenging of all but risk has always been with us and trained professionals understand resilience is key to keeping organisations afloat ”
— Malcolm Harrison , CEO , CIPS Group capabilities , and scale they may not have in-house . Transactional procurement includes routine requisition-to-pay activities ( R2P ), such as purchase order creation and management , invoice payment , and vendor management . Outsourcing of transactional procurement has become quite common and can render higher process efficiency and compliance through standardisation of processes , automation , and the availability of skilled workers .” However , despite procurement outsourcing being seen as an appealing option to many organisations , Filyanova is also mindful of the risks involved . “ If companies do not appropriately define the scope and incentives of an outsourcing agreement , they risk losing value over the mid- and long term ,” says Filyanova . “ For example , if the provider focuses mainly on optimising commercial levers - from whom to source , at what prices - and does not address demand and specification levers , 40-50 % of the value may be lost . To effectively influence demand management levers - what and how much to buy - a provider will need to be able to manage change
AUGUST 2020