When retail customers are purchasing goods and services, their focus is on who to purchase them from. When a business makes these kinds of purchases it’s known as procurement, and the process is considerably more complicated.
A business’ purchases are on an entirely different scale compared to retail customers, and so the buyer needs to research more than just the vendor’s price. Vendor reliability, reputation, and timeliness of delivery can be just as critical as the bottom line.
The impact of procurement decisions affect not only the company's bottom line, but also help shape the firm's strategic direction. As such, it is advisable not to assign these responsibilities to an employee who is already bogged down with other priorities or is not properly trained. Quite often, the best solution is to outsource these tasks to a procurement consulting service with the knowledge and experience in the field.
Leveraging Procurement Consultant Services for Your Business
Hiring a consulting service may seem like a hurdle in the short term, but in the long run, these services will pay for themselves through increased cost savings.
What Does a Procurement Consultant Do?
If your business will be paying a consulting firm to streamline your procurement activities, you’ll need to understand exactly what they do.
One of the first areas procurement consultants are going to focus on is your supplier relationships. They examine the importance of each of your suppliers to your business' end product or service. You need to know how the business’ money is currently spent and where there are opportunities for increased efficiency.
With that understanding, they can find vendors that can offer more favorable terms and formulate contracts that ensure firms maximize ROI to give your business a competitive advantage.
Procurement consultants work to implement a frictionless purchase process, including automating procurement systems and digitizing files. The goal here is to cut the number of hours employees spend on procurement activities.
Types of Procurement Strategies
Procurement can look very different when comparing large and small businesses, and varies within a company depending on the goods and services being purchased. Procurement consultants help business owners save money by implementing more efficient practices within each type of these procurement strategies.
This is typically what you see in smaller companies or low value areas of a larger company. Procurement consists of obtaining prices from a few different vendors for a given set of specifications and usually choosing the least expensive option.
Used for larger or high-value orders, strategic sourcing requires considerable research. Contracts with vendors are more complicated and focused on supply chain factors that affect whether goods and services can be delivered on time. A long-term relationship is usually formed with the vendor.
This type of procurement falls somewhere between spot buying and strategic sourcing. These are goods and services necessary for daily operations, but may not be high value enough for strategic sourcing measures. Cost savings will usually come from favorable contracts geared towards bulk purchases.
Benefits of Procurement Consulting
The most obvious benefit to outsourcing procurement strategies is money saved, but it’s not the only advantage to utilizing consultant services.
Finding the Best Suppliers
Searching for and vetting dozens of suppliers can be a major time suck for most businesses and does not necessarily guarantee quality. Outsourcing the job to a procurement consultant lets your business find the best providers across key areas of operational spend including market data, technology, insurance, and travel.
Saving Time and Money
Procurement consultants can uncover major cost savings through expertise and proven best practices in group purchasing and contract negotiation.
Confidence in Their Expertise
Perhaps the biggest advantage of utilizing a procurement consultant is their access to market data, familiarity with suppliers, their commercial models, and their negotiation tactics. Find out how much other businesses are paying for similar services and see if you’re getting the best deal possible.
Consultants take the headache out of the organizational process. Contract and license management tools can help you stay on top of contract expiration dates, auto-renewals, spend, and key terms. These tools can also help you produce budget allocation analyses and other business intelligence related functionality.
Selecting a Procurement Consulting Firm
The first step in selecting a procurement team is understanding what you want to accomplish. What are your business’ pain points? Where do you think it is most inefficient?
Procurement teams will go to great lengths to understand your business, but it’s critical that you understand theirs just as well. These are some of the more important things to look for when hiring a team.
- A procurement team should consist of experts in each domain that will be beneficial to your organization.
- They should focus on tech enablement. You’ll want a procurement team that offers contract management tools to properly organize all of your firm’s contracts.
- They must have a commitment to professionalism and high service levels.
- They should have a proven track record. Look at the procurement organization’s metrics including savings delivered, time saved, and customer retention.
- They must have a stellar reputation with their current customers. Look for organizations that are of a similar size and sector as your own business for the most relevant reviews. Ask the consultant for customer references, if available.
NYC-based Concertiv is establishing a new standard of excellence in B2B procurement consulting by providing the best deals, expert recommendations, and market transparency. With over $300 million total spend under management, Concertiv serves distinguished professional services companies globally, facilitating procurement across a network of 1,000+ suppliers.
Thanks to its unparalleled team of industry experts, unique pan-market position, expansive blue-chip network, and innovative software platform, Concertiv gives business leaders everything they need to feel confident that they are making the best operating decisions.
Contact us today to learn how Concertiv can streamline your procurement process.