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Common Procurement and Outsourcing – Insight

2019-05-16 Business No comment

To be successful, organizations need to develop the right procurement strategy. In addition, while the importance of a well-planned acidification strategy cannot be ignored, you must consider thoroughly understanding the internal communication and hierarchy of your organization before determining your business and procurement guidelines. This is typical because there may be situations where an exclusive procurement model may not fully meet your requirements or company policy.

Once you gain insight into your business goals, you can determine the right purchasing strategy for your organization, which is likely a combination of two or more purchasing models. To help you, here's the difference between two very popular purchasing models:

Outsourcing

In short, outsourcing is the process of transferring some of an organization's activities or processes to a third party. With the rise of globalization, many companies around the world use outsourcing to cut costs and focus on their core competencies. However, outsourcing contracts are often not very flexible, and outsourcing services largely lose control of their functions and processes.

Joint procurement

On the other hand, co-sourcing is a more balanced approach that allows shared services from external suppliers. This is a partnership where the two sides work together to form a working group that supports and maintains various business functions. These workgroups typically work remotely or on the client, depending on the type of support the client requires. Typically, the common procurement contract is signed for at least 3 – 5 years.

The benefits of joint procurement

Co-purchasing is the first choice for companies that value quality, because this sourcing model ensures that customers always have access to skilled resources and quality infrastructure. Compared with outsourcing, cost reduction is at the forefront, and joint procurement is more focused on providing quality and stability to customers. Co-partners always keep in mind the long-term interests of their customers and solve problems in a holistic manner, which is certainly not the case with traditional outsourcing or consulting partners.

For managers who want complete control of their projects, co-sourcing is certainly the best choice, whether it's resource selection or infrastructure quality. It is a unique procurement model that helps managers control the business functions of a common source as an extension of their internal processes. Not only that, it is one of the very few operating models that allows managers to increase asset growth through economies of scale.

Joint procurement is increasingly seen as a procurement model that has advantages and provides a sustainable competitive advantage. However, considering the common procurement as a comprehensive panacea for each challenge may be a mistake, especially for large outsourcing companies, because the common procurement needs to closely adapt to the needs of the enterprise. Establish a procurement model.

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