Procurement isn’t just about securing the lowest prices from suppliers or curtailing maverick spending. While these aspects are important, the true power of procurement lies in its ability to transform into a strategic function that drives long-term value and aligns with overarching business goals. Experienced procurement consultants are pivotal in this transformation, leveraging a range of value levers to optimise processes and outcomes.
In this article, we’ll explore how these consultants can enhance your business’s value beyond mere cost savings.
How Can I Add Value To My Business?
Procurement consultants can do more than simply reducing costs or improving operational efficiencies; they’re capable of transforming the procurement function into a strategic component of an organisation, driving long-term value and contributing to overall success of your business.
This transformation involves integrating procurement strategy with business objectives to enhance efficiency, foster innovation, and improve supplier relationships. By doing so, procurement moves from a traditional cost centre to a value-added part of the business, driving long-term strategic benefits.
Harnessing Value Levers In Procurement
Reducing Your Business’s Costs
Procurement cost savings depend on several factors, including the business’s maturity level. However, specialist procurement consultants can help to increase savings and reduce costs by between 12 and 15 per cent for an immature organisation or 3 to 5 per cent for a mature one.
Experienced procurement consultants can reduce costs for a business in various ways. Contract negotiations are a crucial aspect of the procurement process because they determine the terms and conditions that will govern the relationship between the buyer and supplier, including pricing, delivery timelines, quality standards, and risk allocation. When existing contracts are identified as uncompetitive, consultants can renegotiate to achieve cost reductions or favourable terms or mitigate risks to prevent potential losses.
These savings can be realised in cash or non-cash forms. For instance, some social value benefits, while not directly impacting the bottom line, are value creators that enhance a company’s reputation and deliver long-term value. Consultants may also recommend strategic investments or match funding to harness a client’s ability to invest in opportunities that can create value further down the line.
Eliminate Superfluous Expenditure
Businesses need to keep a tight rein on spending to control costs, effectively manage cash flow, enable accurate budgeting and forecasting, strategically allocate resources, and mitigate financial risks that could threaten their long-term success and profitability. Superfluous expenditure, which doesn’t add value to the business, can waste valuable resources and expose the organisation to unnecessary financial pressure.
Procurement consultants can eliminate superfluous expenditure by ensuring adherence to procurement channels and contractual agreements. Consequently, the business will benefit from enhanced visibility, enabling it to identify and address uncontrolled spending, further contributing to cost optimisation.
Cut The Cost Of In-House Recruitment And Training
Procurement consultant and partner services are a cost-effective way to streamline your business’s processes without imposing significant burdens on your budget. By taking advantage of the expertise of external procurement specialists, you can eliminate the need to recruit and train in-house staff and instead divert resources towards purchasing new software and building more robust infrastructure. And, because outsourced procurement is scalable, you will pay only for the services you need, when you need, rather than having to finance a full-time team during quieter periods.
As a cost-effective alternative to in-house procurement, consultants can elevate your business value through:
Allows companies to access specialist knowledge and experience of procurement experts who are adept in industry best practices, market trends, and cost-saving measures.
Helps to spread the ownership of risk as the outsourced provider assumes a degree of responsibility for supplier and contract management.
Provides more detailed insights into spending patterns, supplier performance, and cost-saving opportunities as outsourced procurement companies have access to specialist software and technology.
Ensures that suppliers meet ethical and regulatory requirements as procurement experts are trained in compliance and can effectively navigate complex regulatory frameworks.
Find Out More
Interested in transforming your procurement processes to maximise business value? Start by assessing your current practices with the Quantum 360 Maturity Assessment Tool. This tool will help you identify key areas for improvement and quantify potential value, providing a clear roadmap for strategic enhancements.
By understanding your maturity level, you can better tailor your approach to procurement and realise the full potential of strategic sourcing and value creation. Whether you’re looking to refine your existing operations or explore comprehensive outsourced procurement solutions, Quantum 360 is here to guide you every step of the way.
If you would like to find out more about how our outsourced procurement services could increase your business’s bottom line, please contact Quantum 360 today.
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