Procurement Service Provider

The successful way to sustainable savings

What is a Procurement Service Provider?

A Procurement Service Provider (PSP) is a third party used to supplement internal procurement activities relating to sourcing and supplier management. These tasks include:

• Strategic Sourcing: Spend Analysis, Category Sourcing, RFQs/Auction services, Contracting, Low Cost / Best Cost country sourcing
• Category Management: Market Intelligence, Contract Management, Supplier Performance Management, Tail Spend Management, Savings and Compliance Tracking
• Procure-to-Pay: Order Management, Invoice Management, Spot Buying, Catalogue Management

The use of Procurement Service Providers is rapidly increasing due its high return of investment. For the typical company, procurement costs can represent anywhere from 50 percent to 70 percent of annual revenues. So even small percentage reductions can have a big impact on profitability. Procurement Outsourcing is as well easier to implement than other forms of BPO. There are lower set up costs and less in the way of transition disruption.

Why use a Procurement Service Provider?

Companies may consider Procurement Outsourcing to deliver immediate benefits:

• Achieve year on year costs savings and supplier performance improvements: PSPs are able to provide significant cost savings through in depth market knowledge and purchase volume aggregation across multiple clients. Cost reduction on purchased goods and services often average between 10% and 30%, topping 50% in some cases (LCC sourcing, indirect spends management)
• Maximize return on existing procurement assets: The purchasing team can concentrate on core business, delivering higher cost savings because time-consuming tasks are transferred to the PSP.
• Reduce cycle times and increase service delivered to end users: Outsourced procurement teams allow companies to benefit immediately from experienced procurement specialists support & expertise. High levels of automation are as well necessary to ensure that an RFQ is processed in a minimum period of time. That is why PSPs uses extensive sourcing databases, RFQs methodology and dynamic pricing negotiation solutions to deal quickly and efficiently.
• Increase your spending coverage: A PSP is able to benchmark practices and prices for each purchase category he is responsible for. He will apply a standardize process to every purchase category.
• Reduce your fixed costs and operational risks: At most organizations, it is very expensive and difficult to maintain domain expertise in every category of spend. Procurement outsourcing solutions deliver rapid results without adding significant fixed costs, infrastructure, people and all the attendant risks and required time for that team to structure itself, its processes and its expertise.

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