What is Virtual Procurement and Why Should You Care?
Any of this sound familiar? Then you need Virtual Procurement!
“With recent minimum wage increases, I need to find better ways to control my costs and to stay profitable while still delivering the highest level of service to my customers.”
“We are too small and can’t afford to hire a full-time procurement person. We are busy and just don’t have the time to focus on procurement.”
“We hope for good prices, but we usually 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.”
“Supplier relationships are too close. They don’t deliver on their promises. Communication is lacking or too casual.”
If any of these statements resonate with you, please keep reading.
In Canada, many large corporations realized in the early 2000’s, that they needed to do more to control their costs. Many began looking hard 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.
A few years later, in the late 2000’s 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 companies bottom line and even help capture innovation. This is a sure sign of the growing level of understanding and sophistication of procurement in Canada.
But where does this leave smaller companies that can’t 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 driving innovation, 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 even a contract resource, or if there is, and they can afford to do so, they will 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. Still others simply don’t know the value and savings a strong procurement process can bring to all companies.
So, what can these small and medium sized business’s do without breaking the budget? There is a new solution that offers, 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, the services are delivered virtually 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, a renewal to achieve more favourable terms and pricing, a competitive bid to several possible suppliers to achieve the best overall solution considering quality and cost or even a full end to end project including project management for implementation of a solution. Savings, or the return that can be seen are between 3-5% of the spend or 2 to 10X plus the cost of the service or the investment needed to negotiate the savings. Our service more than pays for itself. That means you can expect to not only cover the cost of the services, you will likely 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.
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 and negotiations process, delivering market competitive pricing to drive bottom line savings. We can even manage all 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? 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? Would you like to have a Procurement professional assess and benchmark your expenses and confirm you are getting the best prices, or identify potential savings, ALL for FREE? Yes, FREE, no obligation. You have nothing to lose. No fees to pay unless you want our help to save you money. Even if you want our help, our fees will always be more than covered by projected savings. If you are get the best pricing, that’s great! Now you know for sure. Nothing to lose but lots to gain.