What Is Virtual Procurement – 2020?
What Is Virtual Procurement – 2020?
This article was originally published in 2018 and has been updated for 2020 and the new realities businesses must face and the evolution of “Virtual” Procurement”.
Any of this sound familiar?
“With the pandemic, our team is working virtually, focused on helping our customers, trying to generate revenue while struggling to cut costs.”
“Our contracts were negotiated pre-Covid-19. We know our business has changed dramatically and our contracts need to be updated but we are too busy focusing on driving revenue.”
“We are too small and can’t afford to hire a full-time procurement person. We are too busy to focus on procurement.”
“We hope for good prices, but we are forced to just accept what suppliers offer. We are leaving hard earned money on the table.”
“Contracts are stored in someone’s drawer or lost, never to be seen again. Contracts often expire leaving us scrambling.”
If any of these statements resonate with you, please keep reading.
Procurement in Canada – Circa 2000
In Canada, many large corporations realized in the early 2000’s, that they needed to do more to control their costs. Many began looking harder at their expenses, how they were buying, often tactically without leveraging their full procurement power; and began centralizing the Procurement function rather than leave it to each individual department to buy on their own. The value of Procurement was just starting to be understood.
Procurement in Canada – The Recession 2008
A few years later, in 2008 the economy took a downturn and revenues began to slow, flatten and even decline. These companies redoubled their efforts, looked hard at their expenses and called upon their procurement organizations for help. If the top line isn’t growing, you need to be laser focused on the bottom line. Those same companies, out of necessity, became more sophisticated and implemented Strategic Sourcing and Category Management, delivering substantial savings to their company’s bottom line and even helping to drive innovation. The value of Procurement in large enterprise was better understood and Procurement stepped up to help capture much needed savings.
The Pandemic 2020
In 2020, the world has been turned upside down, hit with a global pandemic not seen in more than a century, if ever. Economies everywhere are devastated, borders remain closed, while non-essential business forced to shut down to stop the spread of the virus and protect their employees very lives are slowly reopening. The economic impacts are just now being felt as businesses struggling without revenues or income are now shuttering permanently and laying off employees. Those who survive must focus on reviving revenues, accelerating digitization, streamlining, automating, enabling virtual work and again, driving savings to the bottom line. This is not a nice to have, it is an absolute imperative for survival. The pandemic has raised widespread awareness of Supply Chain and Procurement at all levels and size of business, in health care, agriculture and government. Yet again, Procurement must step up to help get businesses and the economy back on its feet while driving bottom line savings, modernizing contracts, and fortifying for the new global normal.
Virtual Procurement 2020
But where does this leave smaller companies, already struggling with the impacts of Covid-19 that cannot afford a dedicated procurement resource, let alone an army of Strategic Sourcing professionals? Companies that have 50-1000 employees are putting most of their resources into customer facing and revenue generating endeavours. Often small companies must leave the purchasing to a functional group or a person in IT or Finance, reacting when a need arises. Perhaps there is not enough volume of purchasing activity to justify hiring a full-time or contract resource. Or if they can afford to do so, they may likely hire someone full-time who is very junior, fits their meager budget and too often lacks the skills and experience to drive savings and strategic value for the organization. Many avoid doing RFP’s due to lack of knowledge and fear of a perceived complicated and long process. Others, quite simply, still are not aware of the value and savings a strong procurement process can bring to all companies, of all sizes, in all sectors and stages of growth.
So, what can these small and medium sized business’s do without breaking their already strapped, budget? The solution is Procurement as a Service or Virtual Procurement services, that will help these smaller companies.
So, what exactly is Virtual Procurement?
As the term would suggest, Virtual Procurement services are delivered virtually and fractionally by highly skilled and experienced procurement professionals, meaning, there is no need for dedicated, full-time people, on-site at your company’s location. No need to dedicate space, equipment or pay a full-time salary or other benefits. Further, the services are project based with a targeted return on investment (ROI). It can involve a simple contract renegotiation to update your contracts, achieve more favourable terms and pricing or a competitive bid to several possible suppliers to achieve the best overall solution considering quality and cost. Savings range from 5% – 25% of the spend or 2X to 10X the cost of the service to negotiate the savings. ProcurePro’s Virtual Procurement services more than pays for itself. That means you can expect to not only cover the cost of the services, you will also see savings delivered that are double to ten times that which you would have to pay for the services to start with. Not a bad return on investment.
Procurement Expertise for Small & Medium Size Business
Virtual Procurement services affords small and medium business’s access to the same benefits and sophistication a large enterprise enjoys; skilled and experienced Procurement professionals employing a strategic approach to procurement including assessing and analyzing spend, identifying savings opportunities, managing the competitive bid and negotiations process and delivering market competitive pricing to drive bottom line savings. At ProcurePro, we can even manage all of your contracts for you, utilizing our new Contract Management as a Service (CMaaS). No more missed renewals or lost contracts!
So why should you care?
The pandemic has not affected your business. You are already getting the best prices, right? You have all the time in the world to negotiate with suppliers. You have all your contracts stored electronically and know exactly where they are and when they renew.
Hmm. Not so sure?
If you would you like to have a procurement expert assess your expenses and confirm you are getting the best prices, or identify potential savings, contact ProcurePro to book your free assessment by contacting us at firstname.lastname@example.org or call 416-505-8698.
President & CEO ProcurePro Consulting