Procurement Value Creation: Optimizing Your Managed Services
PROCUREMENT MANAGEMENT SERVICE
The modern organization needs to maximize the value generated from efficient procurement management of goods and services. That’s the bottom line for any C-suite executive looking to make their organizationsuccessful. While many business leaders are familiar on high-level with the purchasing process, it may be difficult to understand the hidden gains possible through an optimized procurement management service. This guide offers insight into ways to benefit from managed services, helping executives understand the importance of collaboration and leveraging the best resources to optimize their procurement.
Step 1: Align Your Corporate Strategy
The first step in using managed services solution to create value from efficient procurement is to ensure that your corporate strategy is aligned with the ambitions of the organization. Strategic objectives should be identified, with operational targets clearly articulated. When goals are clear, and the wider context of corporate objectives is understood, the advantages of managed services can be more easily evaluated. Consider the resources necessary to achieve the desired objectives, and determine whether outsourced solutions are preferable to internally managed services.
Step 2: Leverage Proven Partnerships
Once you have established the need for managed service, it is time to partner with reliable, proven vendors. Look for suppliers who have an established track record of quality, excellence and performance. Research their operations and look for evidence of reliability and trustworthiness. While cost savings are an important consideration, quality and dependability should take priority when selecting partner to ensure confidence in the solutions they provide.
Step 3: Focus on Cost Reduction
Next, consider ways to drive cost reduction through your procurement solution. Evaluate opportunities to source alternative suppliers, improve the efficiency of logistics and leverage economies of scale. Negotiations can be undertaken with prospective vendors to ensure the best prices and terms are added to contract. Technology solutions can help streamline the procurement process, reducing costs and increasing user satisfaction. During this stage, it is also necessary to review the cost-efficiency of current suppliers, and to considering re-tendering contracts if more economical solution is available.
Step 4: Abandon Manual Processing
Managing contracts manually is both time consuming and provides only limited view of the complexities of an extended supply chain. To encourage scalability and increase efficiency, manual processing should be minimized through the use of automated solutions. Digital tools can standardize process for greater control and visibility throughout the organization, as well as offering detailed analytics which can provide insight into operations and future procurement requirements.
Step 5: Streamline Compliance
In parallel to optimizing the procurement process, compliance must remain part of the managed services solution. Meeting legal and financial obligations is priority, and can be maintained by implementing automated checks within the managed services system. By eliminating tedious manual tasks, the time spent monitoring procurement activities can be reduced, while ensuring full compliance.
Step 6: Analyze Key Performance Indicators
Finally, measure the performance of your managed services by monitoring key performance indicators (KPIs). Average order values, deliveries on-time and frequency of supplier problems can all give insight into the effectiveness of your managed services provider. Report on performance across the supply chain and use insights to improve service and lower costs.
Conclusion
Managed services are critical for any organization today looking to manage procurement efficiently. But beyond efficiency lies the potential to leverage the process to create value for the organization. Through implementing effective strategies at each stage of the procurement process, the advantages of managed services can be fully utilized, allowing executives to maximize value to the organization.
