Understanding The Concepts
Numerous companies don't realize what procurement outsourcing is and why it can become a key piece of their operations. In the 1990's, the AT Kearney counseling firm started procurement outsourcing and began offering procurement outsourcing counseling services. Since then, procurement outsourcing has gained both acceptance and momentum.
What is marketing procurement? It is the activity of an organization to outsource some or the greater part of their procurement capacities, and/or the obtaining of merchandise and services, through an outsider. This does not mean that the organization loses control of the procurement process, however merely that is utilizes the services of outsider service provider. By taking this approach, the organization which elects to implement outsourced procurement can realize cost reduction, improved efficiency, improved compliance, and enhanced performance. It can involve some or the greater part of the organization's staff, technology, systems, and vendor management. By and large, the procurement outsourcing firm will report to the organization which has engaged its services.
With expense reduction being one of the primary driving components for companies, marketing procurement outsourcing helps meet this requirement. Even with various economic ups and downs in a few industries and geographical areas, net revenues are likely to remain low, and worldwide competition will continue to increase. Also, crude material expenses have increased and are expected to continue increasing, and the world's economic conditions will continue to affect more and more countries, companies, and people. With companies spending more than half on their external products and services for every dollar earned there is the potential to reduce a great deal of expenses.