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• The quest for efficiency and agility in supply chains has led companies to develop relationships with suppliers from all over the world.
• Companies cannot limit themselves to only sourcing from one supplier or market when value opportunities abound elsewhere.
• Global trade has led to complications in supply chains and despite the evolution of technology, there is still an imbalance between technology adoption and value realization.
Indeed, there are notable applications that have been built specifically to give more visibility into supply chains. These applications, if well leveraged, can result in more efficient workflows, cost savings, and better relationships with suppliers. However, their complexity means that supply chain managers do not always maximize their value. Perhaps these internal managers are too preoccupied with other administrative work. In other cases, bureaucracies and conflicting subjective opinions lead to suboptimal decisions despite the existence of evidence that suggests otherwise.
Procurement as a Service
One way to get over these challenges is the adoption of a procurement-as-a-service approach to handling an organization’s procurement. It involves outsourcing the procurement function of the organization to the best technology and the most qualified people. Procurement as a service comes as part of a wider strategic sourcing strategy.
Companies can reduce the complexity of their supply chains through the adoption of the right technology tools and applying them consistently. There are organizations that specialize in building procurement technology tools and investing in the best talent to help client companies unlock opportunities in their supply chain operations. This is the essence of global procurement services.
Elements of Global Procurement Services (PaaS)
Global procurement services help companies through certain layers that unlock value.
Services- They help design best-in-class operating models, quality standards, hiring processes, and portfolio. They pinpoint opportunities for automation.
Technology- The second layer comprises the range of cloud applications and other infrastructure that is availed to a company. It leads not only to greater efficiency but also professionalization of operations.
Intelligence and Analytics- Global procurement services should help companies make the best use of the data generated in their operations. When well used, it should uncover great opportunities, emerging trends, and areas of weakness.
Risk Management- Global procurement services providers help client companies better identify and mitigate risk in their operations.
Specific Components of Procurement as a Service
E-Sourcing and Vendor Management
To bring efficiency to supply chains, global procurement service providers equip companies with the right technology to store and track information about vendors. Vendor management software helps to streamline the process of selecting vendors and assessing the inherent risk of working with them. The use of e-sourcing tools adds transparency in the process of vendor selection thus eliminating the risk of underhand deals or maverick spending. These tools also aid collaboration in the preparation of requests for quotes and proposals, evaluation of supplier proposals, performance reviews, and so on. Standardization of processes is another important outcome of procurement as a service. It results in richer decisions and ultimately results.
Contract Lifecycle Management
Procurement as a service involves using a cloud-based application to streamline the process of supervising a contract from its initiation to completion. If a contract is due to expire and requires renewal, such software eases the process of contract renegotiation. The software allows a company to create templates for the most important documents involved in contracts. These will be organization-specific. The contract lifecycle management software also eases the current drafting of contracts through dynamic clauses. You can quickly generate contract content based on region, product, terms, or other criteria.
One challenge that companies face when dealing with many supplies that are geographically spread throughout the world is contract review. A thorough review of contract terms is important to ensure that your company is getting the best value in terms of prices, discounts, performance incentives, and so forth. Contract lifecycle management software can be sophisticated enough to provide a risk score for contracts and highlight high-risk clauses.
Spend Analytics
Analytics is a big part of procurement as a service. Organizations first need to figure out how to collect data from all the applications and systems they use to manage their procurement effort. Next, the data requires to be cleaned and assessed for quality before analysis. The analysis then reveals relationships, trends, and new opportunities. With large enough datasets, organizations can even begin building models to make predictions. This can be a great way to reduce risk in decision-making while still being aggressive in taking up new opportunities in the supply chain.
Performance Review
Another important aspect of procurement as a service is being able to objectively review performance based on cost management, risk management, and other indicators of performance. The mix between talent and technology helps create yardsticks for individual organizations. Global procurement services providers are also in touch with industry best practices, which they can use to assess the performance of client companies.
In fact, with real-time data, it is possible for companies to have dashboards and other visualization tools to better understand their procurement chain.
Streamline Your Global Procurement Operations
A major advantage of outsourcing some of your procurement to a global procurement services provider is being able to focus on your organization’s core business. In return, category experts will handle your procurement, which brings long-term savings. Your organization will have a wide network of suppliers with whom you’ll establish mutually beneficial relationships.
To find out about the global procurement services and the tools that can help streamline your strategic sourcing strategy, reach out to ProcurePort– the world’s leading provider of e-procurement software.