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Procurement divisions face the same business challenges as others – to do more with less in an increasingly competitive marketplace. But, the fast-moving contingent workforce world is about to get a whole lot more complicated. All firms are competing to see who can manage their extended workforce and spend the best. The fight to realize cost savings across the enterprise has never been more intense.
The good news is that new research can help you tap into opportunities to boost your bottom line. Once you're armed with the right information, you can take control of your spend and supply chain portfolio. If you're up for the challenge, you can positively affect the bottom line for your organization.
Sourcing, Supply Chains and Secret Weapons
Remember the James Bond movies? Before taking off on his mission, 007 usually got equipment from Q, the quartermaster. Later in the movie, Bond usually finds himself facing a sticky situation, but just in the nick of time, he'll inevitably remember the gadget Q gave him and use it to escape or defeat the villain. In the movies, a secret weapon can be a game-changer.
Well, there are “secret weapons” in the real world, too. Organizations seeking to realize cost savings in today's global economy should turn to their secret weapon: procurement. Think about it – historically, sourcing teams have been in charge of identifying cost savings. They have the technology, processes and experience to influence the organization's bottom line, and they are uniquely positioned to create huge opportunities for enterprise companies.
The Spend Management Tactic No One Is Talking About: Optimizing External Services Spending
Procurement should be a core factor to many business processes.
Unfortunately, that is not always the case. In fact, Spend Matters found that “relevant best practices and principals in managing materials spending are not well applied to services spending – particularly in the area of contingent labor.”
There is a huge opportunity for organizations to improve their services procurement and supply chains.
“An immense opportunity remains to drive even basic efficiencies, control and continuous improvement in services supply chains. Based on our findings, it is safe to anecdotally observe that the management of services procurement and supply chains is at least 20 years behind direct materials processes and a decade or greater behind indirect materials.” ~Jason Busch and Pierre Mitchell of Spend Matters
Jason and Pierre of Spend Matters also suggest that, “companies looking for any remaining proverbial 'low hanging' procurement fruit within their overall spend and supply chain portfolio should prioritize services to drive total cost savings and management, compliance, risk reduction and overall business improvement compared with other areas of spend.”
Still not convinced procurement can come to the rescue? Here's even more proof.
5 Reasons Why It's Practical and Profitable to Let Procurement Lead the Charge
Here are 5 reasons that, in the fight for cost savings, procurement is the secret weapon.
- We're witnessing an increasingly services-based economy and procurement teams are best equipped to implement an efficient and effective execution process for managing services spend. For example, if you decide to start using a vendor management system (VMS) for services procurement, your sourcing professionals will be the ones with the knowledge to get you started.
- Most organizations need help in the area of contingent labor. As company value chains become more "virtualized," many organizations are losing visibility into spend. Because contingent labor is "the ultimate example of on-demand resources and expertise," according to Jason and Pierre, organizations will turn to their sourcing teams for expertise.
- It doesn't make sense to reinvent the wheel. Smart business leaders will translate and adapt processes and lessons learned from the direct and indirect materials supply chain into the services supply chain.
- Organizations that want to close the yawning gap between services procurement supply chain and direct and indirect materials need results fast. Who better to get the ball rolling than procurement? After all, many good procurement practices begin with spend segmentation.
- Best-in-class organizations want more spend under management. Managing all types of contingent workforce spend under one umbrella is a significant opportunity. In most cases, procurement may be better suited for this than say, human resources.
Do you have any "secret weapons" when it comes to managing your contingent workforce? Share your thoughts by tweeting @BeelineVMS.