19 Nov 2018

Adopting digital transformation

Adopting digital transformation successfully is a global theme within procurement. The emergence of technologies such as AI, blockchain and virtual reality means there are a multitude of ways that technology can be harnessed to improve efficiency. A recent study from CIPS found that almost 95% of procurement professionals believe that digital transformation will fundamentally change the way that procurement services are delivered. This blog post examines some of the challenges of adopting digital transformation and how to overcome them.

Understanding the capabilities and limitations of technology

It’s easy to envision new technology as the fix for all problems, without considering the end goals or the plan that needs to be put in place to make implementation successful. It’s important to consider what you hope to achieve through digital transformation, and to have a solid plan and defined end goals in place before committing to innovation. It’s also crucial that a digital transformation strategy involves all stakeholders within the business – considering multiple perspectives will greatly enhance effectiveness. A retail cost reduction consultancy can help to evaluate the effectiveness of current technologies and devise a robust digital transformation strategy.

Consider the value of digital transformation, not just the cost

Investing in new technology can be very expensive, so it’s important to look at the value that it could deliver beyond the initial outlay. Ideally digital transformation will lead to a far greater degree of automation, boosting efficiency. So aside from reducing costs by speeding up procurement processes, successful digital transformation should free up resources, allowing skilled procurement professionals to focus on higher level tasks that require expertise rather than mundane, repetitive items.

Changing the underlying procurement processes

A common mistake when implementing new technology is to leave old processes in place and just hope that digitizing them will speed them up. The real value and transformative impact of new technology can only be gained from revamping processes too. Successful digital transformation should enable organisations to achieve processes that were previously impossible if it is implemented strategically. A retail cost reduction consultancy can help to draw up a thorough procurement transformation strategy, which evaluates current procurement processes and their effectiveness.

Involving people in the implementation of digital transformation

One of the most challenging aspects of implementing digital transformation is obtaining buy-in from people who will be using the new technology. Planning is key here – it’s important to widely communicate the benefits and ultimate objectives of a digital transformation plan before it starts so that people understand why they are being asked to change. Adequate planning also involves focusing on deployment so that people understand how to use a new system properly, rather than reverting to their old way of working. A retail cost reduction consultancy can help with change management, using their skills and expertise to ensure that all stakeholders buy in to digital transformation, ultimately enhancing the chance of success.

At Optimise 5, we can offer retail cost reduction consultancy services, including support in e-procurement and digital transformation, as well as cost management audits and strategic cost reduction. When your company is offered a risk-free approach to improvement, what have you got to lose? Find out more here – www.optimise5.com

19 Nov 2018

Benefits of Demand Challenge

Demand challenge and good demand management is an essential part of procurement. Demand challenge can be defined as evaluating a specification to ensure a product or service isn’t over spec’d. For example, can a specification be downgraded and still serve its purpose without a risk to supply? Is it a necessity or just on the wish list and has the procurement department explored every avenue for fulfilling this requirement?

In this blog post, we will explore the benefits of demand challenge and the best way to implement demand management effectively across your organisation.

Reaping the cost benefits

The most obvious benefit of thorough and effective demand challenge is cost reduction. Often a specification can be significantly downgraded from its original incarnation without having a major impact on its end purpose. Business case analysis has shown a savings opportunity of up to 20% by implementing more informed decision making about specifications and requirements. To make such savings, it’s important that procurement professionals can distinguish between ‘wants’ and ‘needs’. It’s also crucial that a one-off need on an isolated occasion, such as overnight delivery for example, doesn’t then become a habit which is carried out because that’s the way it’s always been done. A procurement consultancy can provide an impartial view on demand management and help to devise an effective mechanism for differentiating between ‘needs and ‘wants’.

Delivering environmental benefits

As well as trying to achieve baseline savings, growing numbers of organisations have a renewed focus on sustainability. It goes without saying that implementing demand challenge could have major environmental benefits by reducing wastage and therefore greatly improving sustainable performance.

Expense Reduction Consultancy - Optimise5

Reviewing replacement spend and extensions

Even where initial demand challenge is good, it is often weak when it comes to replacing products or reviewing contract extensions. It’s important to ensure that initial agreements don’t always automatically roll over into ongoing commitments. Regular reviews of repetitive spending can deliver huge benefits in terms of reducing spend and building good demand challenge habits.

Improve product value and categorization

An effective demand challenge strategy will consider the perspectives of all stakeholders to build a full picture of the hidden value of certain products and services. For example, the marketing department may see value in particularly unusual products that enhance brand recognition thereby delivering value beyond initial cost. The operations department may prefer a standardization of shapes of products to maximise efficiency. To truly benefit from demand challenge, it’s important to unify these perspectives to create a set of fit for purpose business needs to inform the category strategy. A procurement consultancy can help to do this by developing a strategy that collates stakeholder perspectives, desired outcomes and demand drivers.

Adapting policies and processes and integrating technology

An effective demand challenge strategy will require a change in policies and procedures especially when it comes to drawing up specifications. To maximise demand driven efficiencies, it’s also important to integrate technology – to monitor the overall value of a product or service and to flag up when spend needs to be reviewed. It’s also crucial to communicate new policies widely to all stakeholders and to manage the cultural shift that needs to come along with the change. A procurement consultancy can assist with change management to make transition run smoothly across all departments of your organisation.

Optimise5 is an international procurement consultancy, offering a range of services including the implementation of demand management to help you make substantial, sustainable savings and improve your bottom line. When your company is offered a risk-free approach to improvement, what have you got to lose? Find out more here – www.optimise5.com

30 Oct 2018

Managing Cultural Change Within A Corporate Organisation

Managing cultural change within an organisation is often one of the biggest barriers to transformation. In fact, a recent Booz and Company study suggested that 96% of leaders believe cultural change is needed in their organisation. Supporting cultural change is a large part of what a procurement consulting firm can do as part of the implementation of a procurement transformation program. This blog post covers some of our tips for managing cultural change within a corporate organisation.

Evaluate the current culture

Perform a critical evaluation of the company’s current culture and its effectiveness in terms of productivity and general well-being. It’s impossible to effect positive cultural change without a thorough understanding of the current climate within an organisation, so it’s important to start with a complete assessment.

Establish a sense of urgency about change

Make a cultural shift into a priority by examining market and competitive realities and identifying potential crises and major opportunities to act on. Instilling a sense of urgency about a cultural shift by emphasising the opportunities it will bring will lead to a quicker buy-in throughout the organisation.

Create defined leadership roles to manage change

Creating a ‘team’ of people to prioritise and guide the change will make it far easier to implement effectively. A procurement consulting firm can help to add fresh input to this team and work alongside it to implement change throughout the whole organisation.

Ensure that the same culture is aligned through every part of the organisation

It’s important to ensure that any cultural change that is introduced within procurement reflects the whole company culture. For example, if a procurement department is asked to focus on cost reduction but the whole company ethos shifts towards sustainability there will be a serious misalignment. Cultural misalignment will soon lead to disengagement and act as a barrier to any significant change taking place. A procurement consulting firm can help to devise a transformation plan which evaluates whether the culture within a procurement department is aligned to the company culture.

Communicate the vision for change effectively

To implement cultural change, everyone within the organisation needs to understand the long-term vision. Communicate why change is taking place and what the long-term objectives are, as well as the ultimate benefits. One of the biggest reasons people are reluctant to change is a lack of understanding of why they should and what they will gain from it. Therefore, it’s important to clearly communicate the strategy and vision to all stakeholders. A procurement consulting firm can help to devise a strategy to communicate a change management plan throughout the organisation.

Incentivize short-term wins

Recognise and reward the small gains along the way and the contributions to change that all employees have made. This will incentivise team members to keep making changes and help them to see some benefits even before the long-term objectives are achieved.

Optimise5 is a procurement consulting firm that offers procurement transformation services, including the support to make the necessary cultural change that goes along with transformation. When your company is offered a risk-free approach to improvement, what have you got to lose? Find out more here – www.optimise5.com

22 Oct 2018

How can a Procurement Function support a CFO?

For a procurement function to be at its most effective it needs to be working in close conjunction with all other elements of the business. There is a particularly close collaboration with procurement and the Chief Financial Officer, and this blog post examines how procurement can support a CFO.

Establish payment terms to support working capital

Maximising working capital is usually a high priority for all CFOs. To support this objective, procurement can establish favourable payment terms, allowing the company to collect on accounts receivable as soon as possible while taking the longest payment terms available from suppliers, from the outset. This is usually part of the overall strategy to improve an organisation’s bottom line which a procurement company can help to implement.

Implement technology to automate processes

Implementing the right technology within the procurement team to automate as many processes as possible will improve cashflow and enhance management information, which will in turn support the CFO. In particular, there is no easy way to monitor contract terms and timing without automation, so coordinating this through procurement provides a simple way to monitor cash flow in and out of the organisation. A procurement company can help to devise a procurement transformation strategy that integrates the use of technology and automation.

Procurement Company - Optimise5

Find ways to innovate

It’s not all about cutting costs, CFOs want CPOs and procurement teams to think of innovative, disruptive ways of working. This might mean innovative ways of sourcing suppliers, products or services, or new ways of integrating technology. The best innovation usually leads to added value which is often just as much of a priority for CFOs as keeping baseline costs low.

Align procurement KPIs with the organisation’s overall strategy

Sometimes the CPO can be pursuing key performance indicators that do not match with the company-wide strategy. Procurement KPIs need to be completely aligned with business-wide objectives to be successful, although it’s important that the CFO is not trying to enforce unrealistic targets. A procurement company can help to evaluate the procurement strategy and KPIs and involve all stakeholders within the business to ensure it is meeting the right objectives.

Manage interaction with suppliers

Managing supplier relationships is a key focus for procurement, and if this is being well managed can also help to support the CFO. As well as managing the sourcing of products and services and the supply chain, procurement is typically the first point of contact to identify issues or changes that need to be made to payment terms.

Develop a ‘scorecard’ to measure performance

CFOs often measure the performance of procurement on savings only, which can devalue its overall performance and doesn’t help to build the necessary collaborative relationship between CPO and CFO. If CPOs can agree a scorecard based on all performance metrics such as supplier performance, feedback from stakeholders and risk, the two-way relationship is more likely to flourish.

Optimise5 is an international procurement consultancy, offering transformation consultancy and cost reduction services to help you make substantial, sustainable savings to improve your bottom line. When your company is offered a risk-free approach to improvement, what have you got to lose? Find out more here – www.optimise5.com

15 Oct 2018

Overview of Procurement and managing continual improvement within digital businesses

Managing continual improvement within an organisation’s procurement function is vital for its growth, especially for rapidly changing digital businesses. Businesses within the digital sector need to be open to regular transition to stay ahead of competitors in a quickly evolving market. Continual improvement can be challenging to implement though and requires a well-defined strategy.

Identify the tolerance for change

To successfully effect continual improvement, you need buy-in from all parties within an organisation. Its important to identify how much change can be tolerated without exerting undue stress on areas of the business. This involves evaluating the company’s mission, long-term strategies and strengths and weaknesses. An international procurement consultancy can help to perform this evaluation and pull together a procurement transformation strategy which involves all stakeholders.

Automate everyday tasks

Continual improvement is more likely to happen if procurement specialists can focus on higher -level tasks. In the digital sector particularly, sourcing the best-value vendors and supplier relationship management are tasks that will benefit from continual improvement. Shifting expertise towards work that requires specialist expertise and judgement is more likely to boost continual improvement and organisational efficiency. Automating simple transactional tasks will leave more capacity for complex work such as in-depth research on vendors. An international procurement consultancy can help to integrate the use of technology into a company-wide procurement strategy, as well as evaluating procurement processes to expedite automation.

International Procurement Consultancy

Gather ideas from all stakeholders

Successful continual improvement stems from new, innovative ideas which could come from any area of the business. Encouraging staff of all levels to contribute ideas for change will have a positive effect on the speed at which it can be implemented and team morale. All stakeholders and employees should be encouraged to participate in a procurement transformation process as often the best ideas come from staff on the front-line who are dealing with everyday issues.

Keep continually questioning processes

To continually improve, especially in the fast-paced digital sector, everyone within the organisation needs to keep questioning everyday processes and interactions. Simple steps such as standardised, shared RFQ’s or short daily meetings to share best practices between professionals can contribute greatly to continual improvement. An international procurement consultancy can help to facilitate these improvements by working with your team to perform a thorough evaluation of processes.

Combine quantitative and qualitative methods to evaluate improvement

While data analysis is an important part of assessing performance and improvements, it’s also wise during the transition period, to take a qualitative approach at the same time. The value of talking to the procurement team and evaluating how they feel things are working, as well as gathering feedback from other departments and suppliers cannot be underestimated.

Optimise5 is an international procurement consultancy, offering a range of transformation consultancy and cost reduction services to help you make substantial, sustainable savings and improve your bottom line. When your company is offered a risk-free approach to improvement, what have you got to lose? Find out more here – www.optimise5.com

10 Oct 2018

What is happening with Brexit – Deal Vs No Deal and impact to International Economy

The potential consequences of Brexit are still an unknown quantity as the UK waits to see the full impact of deal or no deal. A no-deal situation will occur if the UK and EU fail to reach an agreement by the end of the formal period of negotiations in March 2019. The effects of a no deal could range from the end of freedom of movement for both EU and UK citizens to the withdrawal of EU regulations, all of which will have an impact on the international economy.

The UK economy is already suffering due to the uncertainty surrounding Brexit according to the Chancellor, who says that businesses and consumers are holding back on spending until they see the outcomes of Brexit negotiations.

The possibility of a no trade deal

A no-deal scenario would mean a no trade deal between Britain and the EU. There is some clarity on what the all-back position would be in this scenario, as the UK would then use World Trade Organisation rules. The WTO would impose tariffs on goods that were sent to the UK and vice-versa of around 2% generally but up to 10% on cars and 20% on agricultural products. This would increase the financial pressure on many organisations and in this instance the support of an expense reduction consultancy could be useful to devise a cost reduction strategy that would help to counteract the impact of the imposed tariffs and the bottom line.

The impact on the labour market

Theoretically, a no-deal Brexit could also mean that the rights of EU nationals to live and work in the EU, or UK nationals to do the same in the EU could disappear overnight. This could affect more than 3 million nationals in the UK and more than 1 million UK nationals in the EU. This could have a very heavy impact, particularly in the UK, by increasing salary costs and contract prices. Organisations may find they will need to initiate new financial strategies in order to make cost savings elsewhere, to absorb the increased cost base. An expense reduction consultancy could help evaluate all elements of procurement to find areas in which sustainable savings could be made.

Higher barriers to trading with the EU

A no-deal Brexit will undoubtedly make barriers to trading with the EU much higher. Food and drink companies will face some particularly challenging times, for example, as they will need to register with a new, as yet non-existent, agency to replace the EU’s TRACES system that tracks the trade and certification process for animals, food, feed and plants across Europe. Imports could also start to attract upfront payments on VAT, although the Government is trying to negate this by allowing for delayed payment systems. It is inevitable that business could face exceptional financial pressure trying to cope with the consequences of a no-deal Brexit, using an expense reduction consultancy could help to reduce your cost base and to also develop a sustainable procurement transformation strategy whatever the outcome of the negotiations in March.

At Optimise5, we can offer expense reduction consultancy, to help cushion against the potential economic impact of Brexit.  When your company is offered a risk-free approach to improvement, what have you got to lose? Find out more here – www.optimise5.com

01 Oct 2018

Using a procurement specialist to take energy and petro-chemical businesses to the next level in the Middle East

Energy and petro-chemical businesses in the Middle East are going through a dramatic phase of transition as emerging markets become more prevalent.

The GCC countries contributed 11 per cent of global petrochemical capacity growth over the past decade, making an important contribution to the region’s economies and diversifying them away from their dependence on oil production.

Over the last 30 years the petrochemical industry has seen spectacular growth, but as advantaged new gas supply is expected to end in most countries within the next few years, producers will face obstacles when it comes to domestic growth. Napsta feedstock will present opportunities to build up the export industry but positioning so far from major growth markets could become a handicap.

Improving operational efficiency

The region’s petrochemical producers may find the best way to obtain a tactical advantage is to improve operational and functional efficiency so that they can build the managerial and technical capabilities to grow. A procurement specialist could help here by providing external expertise to review the entire procurement function and draw up a transformation plan which involves all stakeholders.

Harnessing technology

Slower demand growth in emerging economies and less plentiful advantaged feedstocks mean that all petrochemical and energy players in the Middle East will have to work harder on core capabilities and strategy. Technology is going to play a huge role in attaining capital productivity on projects, particularly using digital and advanced analytics. Managed procurement services can help to harness new technology by integrating its use within a company wide strategy that aims to enhance profitability. A procurement specialist can also use vast cross-sector expertise to help source the right suppliers for software, which in the case of new innovation, may be something an in-house procurement team is unfamiliar with.

Building strategic partnerships

As end-market growth rates for petrochemical products slow down in the region, the industry may have to double down on innovation methods. Part of this process might involve enhanced supplier relationship management to forge partnerships at the earliest stages of the supply chain and work on product development. A procurement specialist can offer strategic advice and insight into supplier relationship management and how to use them to foster innovation instead of focusing on a conventional supplier-buyer dynamic.

Reduce core costs

Investment costs have always been high within the industry as the market has flourished, but now expenditures per tons of chemical output are creeping up. Major players are now looking to take a more disciplined approach to expenditure and reducing costs wherever possible. A procurement specialist can help to do this by using extensive expertise to devise a sustainable cost reduction strategy, involving all stakeholders, which improves your bottom line.

At Optimise5, we can offer procurement specialist services, including support in e-procurement, as well as cost management audits and strategic cost reduction to energy and petro-chemical firms across the Middle East . When your company is offered a risk-free approach to improvement, what have you got to lose? Find out more here – www.optimise5.com

01 Oct 2018

Supplier Relationship management

As supply chains become increasingly complex, integrated, and global, supplier relationship management is a critical component of an effective procurement process. It is crucial to identify the right stakeholder to take ownership of supplier relationships, and to integrate strategic objectives of the whole supply chain. A recent survey from CapGemini found that supplier relationship management is a key priority for 97% of the CPO’s that responded, with 60% saying it was a current area of focus within their organisations.

This article will look at some of the steps that CPO’s need to take to ensure that your supplier relationships are managed as effectively as they could be.

Choose a digital solution

As buyer-supplier relationships and supply chains become increasingly more complicated, there are a vast range of components to consider. Focusing on the most important elements and crucial key performance indicators for your business will help you select the right SRM solution. With greater demands than ever on procurement professionals to integrate quality, value and sustainability into sourcing, choosing the right SRM technology is integral to success. Good supplier relationship management software, used correctly, will offer insight into supplier activities, build intelligence to help with decision making and automate compliance tasks.

Build collaborative relationships

Supplier relationships have changed – the complexity and far reaching components of supply chains mean that it’s important to build mutually beneficial two-way relationships with suppliers. Digitization has also made collaborative relationships more important than ever, as there is an option to develop more effective products and gain increased agility. Customers have become better-informed and more demanding and start-ups can shake up the market using free digital tools to respond to customer needs quickly and easily. To live up to these increased customer expectations, companies need to build cooperative relationships with suppliers that promote and encourage innovation. Successful companies tap into the product development process at the beginning, using supplier knowledge to generate ideas, avoid design errors and cut down product development time. This is a key component of supplier relationship that many CPO’s are missing out on – in fact according to a recent Deloitte study, only 39% of CPO’s actively drive innovation initiatives with their suppliers.

Segment supplier relationships

It’s important to categorize suppliers to determine the level of supplier relationship management that is appropriate to achieve maximum value. Not all suppliers require the same level of focus, so categorisation is usually carried out based on spend, business criticality and potential risk. High value suppliers, or those that carry a great deal of risk within their production or supply chain processes, might need more intensive relationship management that goes above and beyond standard cost performance indicators. As discussed above, building a mutual relationship at the start of the product development cycle will achieve maximum value with high-spend suppliers or those that supply business-critical products or services. Managing risk within supplier relationships is also crucial – globalisation, the depletion of some resources and political and economic uncertainty are all factors that need to be monitored and assessed within the supply chain. Lower priority suppliers might not need SRM, beside basic interaction, and it’s important for CPO’s to define which suppliers fall into this category to avid wasting time and resources which could be allocated elsewhere.

Establish effective governance and sourcing analytics

Establishing effective SRM governance means that effective ownership of supplier relationships is in place, and the correct stakeholders are involved in the process right from the start. Categorising supplier relationships must come first, and then it should be easy to assign and define ownership of each relationship based on its priority and the internal expertise available. From there, it’s important to establish top-level objectives and key performance indicators, that both parties agree on, as part of the governance framework. Effective performance management needs continuous tracking – sometimes monitoring can lapse and then both parties can lose sight of the strategic objectives of the relationship. Supplier scorecards are often seen as the best measure of performance because clear objectives can be outlined, and metrics can be applied to keep track of whether suppliers are attaining them.

Advanced spend analytics can also be incredibly useful in building good supplier relationship management. Advanced sourcing analytics cover three main areas, spend analysis, sourcing optimisation and supply risk analysis. Used correctly, such tools can help CPO’s identify new vendors and identify operational risks within their supply base – an APQC benchmark study found that organizations that apply spend analytics typically spend 12 percent less per USD of revenue compared to companies that do not.

Commit to cultural change

Finally, and arguably most importantly, to establish good, effective supplier relationship management, organizations and suppliers must commit to change. As well as introducing new technology, supplier scorecards or advanced analytics, CPO’s need to support and implement the necessary cultural shift which always comes with new innovations, otherwise the framework will not be robust or sustainable.

Optimise5 deliver strategic cost improvement solutions including procurement transformation to improve supplier relationship management to well-established companies. Working with many blue-chip retail companies, our team have successfully saved clients millions. We work closely with Financial teams (including Financial Directors) to strategically improve profits and reduce costs. When your company is offered a risk-free approach to improvement, what have you got to lose? Find out more here – www.optimise5.com

28 Sep 2018

How will Virtual Reality and Augmented Reality change the landscape for business procurement?

Virtual and augmented reality has been one of the biggest technological advances in recent years, transforming numerous industries and adding innovation to every-day life. VR based devices such as Amazon Alexa and Google Home are commonplace in many households and the virtual reality and augmented reality market is set to be worth $120 billion by 2020, according to recent research. The advances in this technology have had a big impact on business procurement as virtual reality offers some interesting ways to streamline processes and systems. To fully understand how it can be harnessed within procurement though, it’s important to understand what virtual reality is, and some of its common business uses.

What is virtual or augmented reality?

In a nutshell, virtual reality immerses users in a fully artificial digital environment and augmented reality overlays virtual objects on a real-world environment. Both technologies have a myriad of uses for business procurement such as advanced sourcing abilities and virtual stockrooms. Virtual and augmented reality is such a broad and fast developing area that this description is just a summary of the technology. If you are considering whether it could help you achieve your procurement goals, then a procurement consultancy could be useful to explore how the technology could fit within a company-wide cost reduction strategy.

Using augmented reality for superior sourcing

Augmented reality can add whole new dimensions to product sourcing and ordering for procurement professionals. Where previously, it was necessary to rely on images and descriptions to make sourcing decisions, now it’s possible to essentially try before buying by inspecting features and functions of an item before ordering. It’s also possible to create virtual stockrooms through augmented reality, placing holographic products onto shelves and checking specifications and colour, saving organisations store room space and potentially preventing wastage.



Combining augmented reality with blockchain to improve transparency

Augmented reality can be coupled with blockchain to bring advanced transparency and traceability to procurement. The combination of the distributed ledger capability of blockchain and augmented reality’s ability to identify and track each shipment can help assure the authenticity and origins of a product.

Using virtual reality business intelligence tools

VR business intelligence tools could also enhance the procurement outlook, making it far easier to search for business opportunities in a 3D landscape. Workflow routing, signoffs and request for actions could all be accelerated if they appeared in a user’s environment using virtual reality. Virtual reality can also play a huge part in assessing request for proposals, as it can facilitate immersive engagement with the buyer and provide possibilities for bidders to send designs that could be visualised.

Getting the best out of virtual and augmented reality

There are a multitude of potential uses for virtual and augmented reality within procurement and the possibilities are evolving all the time. Using a procurement consultancy can give an insight into how the technology could fit into an overall procurement strategy which improves your company’s bottom line. AR and VR will only work effectively if company-wide e-procurement is operating as it should across the board, and is deployed on top of the correct platform, data and processes. A procurement consultancy can help you assess your company’s procurement strategy and integrate VR and AR if appropriate.

At Optimise 5, we can offer procurement consultancy, including support in e-procurement, as well as cost management audits and strategic cost reduction. When your company is offered a risk-free approach to improvement, what have you got to lose? Find out more here – www.optimise5.com

28 Sep 2018

Which approach should I take to Procurement? Manage Services, or Managed Services’.

Are you unsure about the best approach to take to your procurement, and whether managing your own services or managed services would best suit your organisation? As no two businesses are the same then aspects of both models could be the best fit, but here we will explore some of the pros and cons of managed procurement.

Cost reduction

The traditional reason for using managed procurement was cost reduction, which can obviously be a huge advantage. Cost reduction is still one of the biggest drivers for CPOs – recent research from Deloitte suggests that 78% cite cost reduction as their top business strategy – but devising an effective cost reduction strategy in-house can be difficult. Managed procurement can offer a dispassionate viewpoint on every aspect of your procurement processes, from suppliers to technology, to make huge improvements to your bottom line.

Supplier Management

There is a growing trend in procurement outsourcing to move towards managed services, especially when it comes to supplier management. Managed procurement could offer varying levels of service in terms of managing suppliers – from consultancy and advice on increasing ROI through managing the supplier base better, to managing supplier relationships.

Spend visibility

The key benefit of a managed service provider is increased spending visibility across multiple clients. This enables a managed procurement team to act as an extension of your inhouse team, while applying best practices in a category management role to procurement tasks such as payment aggregation, renewing and amending contracts and reviewing suppliers’ performance.

Which model suits your procurement strategy?

It can be tricky to determine which model is the best fit for your procurement strategy. Often it depends on the complexity, processes and the level of integration involved with suppliers and stakeholders. If process changes have a high chance of impacting customers, then it is worth considering managed procurement. Similarly, if many of your procurement process involve highly technical skills or multiple systems, managed procurement could provide industry and company specific expertise that might not exist in-house. If processes generally involve lots of interaction within different branches of the company, a managed service provider can maintain these relationships while working to reduce operating costs.

Adopting a hybrid model

Many companies find a mix of managing services and managed services is the best model for their procurement. Some categories seem to suit managed procurement better than others – for example, those that are not the most business critical but still have a high spend associated with them. Categories that have significant administrative costs attached to their management can also be a good choice for managed procurement.

Optimise5 have delivered successful managed procurement and procurement consultancy to many well-established companies across a wide range of sectors. Our team are MCIPS accredited procurement experts who retain relevant knowledge and experience in managing procurement categories and global procurement functions within corporate organisations. When your company is offered a risk-free approach to improvement, what have you got to lose? Find out more here – www.optimise5.com