With growing numbers of organisations switching to procurement-as-a-service providers, it is crucial for CPOs to implement and oversee four key changes to ensure the engagement proves a success. Here we have collated some vital considerations to maximise your chances of reaping the rewards of the transition.
Look after stakeholders carefully
Procurement-as-a-service suppliers are frequently engaged on a temporary basis, but stakeholder relationships are permanent. CPOs need to continue to hold active responsibility for maintaining the health of these relationships, even while stakeholders come into contact with third-party strategic sourcing experts. That involves introducing the firm that will be doing the procurement work to stakeholders and actively managing their concerns about change (i.e. regarding how to fix what isn’t working about procurement’s relationship with stakeholders as well as strengthening what is).
Maintain high expectations
Secure innovative, strategic third-party suppliers and don’t be satisfied with mere tactical management. With the power of artificial intelligence (AI) and machine learning to assist them, CPOs should ensure that their procurement partners deliver to the maximum extent of their abilities.
De-emphasise the focus on savings
Most organisations continue to gauge the success or failure of their strategic procurement outsourcing in terms of cost savings. But this emphasis deters procurement advisory services from finding other sources of value. Saving money isn’t equivalent to creating new value. It is imperative that procurement builds the stature of the business, not just reduce its footprint.
Welcome the unexpected – but be prepared
Especially for longer-term procurement outsourcing engagements lasting for more than a couple of years, CPOs must integrate optionality and downside protection. If the latter are not in place, and the unexpected happens in defiance of the best case scenario of intentions, potentially irreparable damage can be inflicted on the buyer-supplier relationship. Prepare for the unexpected by anticipating worse case scenarios (and what to do about them) as well. They’re opportunities for innovation, too.
Nick has over 30 years procurement experience in consulting, outsourcing and line roles within industry with international experience across many sectors and industries and led many procurement programs with blue chip organisations.