Can your company benefit from procurement consulting?
Many procurement organizations pride themselves on being self-sufficient. They build stakeholder relationships, implement complex processes and negotiate with challenging suppliers, oftentimes with minimal support from the C-suite. In these situations, it’s understandable for leaders to bristle at the idea of engaging procurement consulting. Why would they hire external help for something they can do for themselves?
ProcureAbility has been helping procurement organizations maximize their effectiveness for over 20 years, and we have pretty much seen it all when it comes to how procurement teams operate.
While we have come across organizations that are simply not equipped with a strategic mindset or are lacking the strategic vision to do things in a different way, many teams are completely capable of thinking strategically and navigating complex internal structures to drive meaningful change.
In those cases, the need for procurement consulting usually comes down to one of three things: time, perspective and expertise.
Procurement teams are stretched thin now more than ever, and even if they can hire, quality talent is hard to come by. Procurement consultants can augment an existing procurement team or provide specialized skills and expertise in critical areas.
For example, one client of ours had a specialty packaging spend of over $20 million that hadn’t been properly analyzed and sourced in years. The client felt they could probably do the work themselves, but it would have to be handled alongside their other work and could take over two years. By bringing us in to assess and source the spend, the client realized 12% savings in a fraction of the time.
Perspective (aka Objectivity) in procurement consulting
There is a lot of power in external recommendations, especially those based on extensive benchmarking, analytics and domain expertise.
Procurement consulting can help validate strategic direction or suggest alternatives that lead to better (and faster) results.
One former client was convinced that switching their req-to-pay tool would solve their data and user-compliance problems, and they brought us in to help build the business case. After running a quick benchmarking exercise and reviewing their current process, we realized that the underlying problems were due to a cumbersome process, not a bad procurement tool. In the end, we recommended that the client stay with their current tool and focus instead on process optimization and change management. The client saved significant investment and time by switching their approach, not their technology.
Expertise in procurement consulting
Few procurement teams have a category or process expert for every situation, nor do they always have access to external insights or best practices to build an effective strategy.
Procurement consultants can bring hard-to-find expertise, market insights and best practices to take your sourcing events, process improvements and organizational design to the next level.
A recent client asked us to conduct a savings assessment and help build a business case for investing in a larger procurement organization. They had a very small team to cover a large amount of spend and knew they were leaving money on the table. Over a period of four weeks, we completed a full spend categorization, conducted in-depth spend analysis and multiple stakeholder interviews, and built a business case with six times return on investment — an impossible task for the employee team in place.
The client used the business case to substantiate their budget request and engaged us to conduct several complex sourcing events while they focused on building the organization and engaging stakeholders. In this case, not only was the client able to access our expertise, they also had the benefit of our perspective and objectivity to validate his request.
So, if you find yourself at the end of the year with an overflow of last-minute sourcing projects, need to build your 2021 savings pipeline or rethink your procurement strategy, you may want to consider engaging a procurement consulting firm for assistance. The results could be just what you’re looking for!
Betsy Pancik is ProcureAbility’s Vice President of Customer Success.