Why use a Procurement Consultancy? And what you should consider

There are many aspects to keeping a business or organisation functional and trying to take them all on by yourself is an impossible task. Just as you would hire an accountant to handle the books, there are practical advantages do using a procurement consultancy. But, why use a procurement consultancy? And if you do decide to explore the possibility further, what should you consider? In this article we will outline everything you need to know:

  • What is procurement?
  • How can a procurement consultancy benefit you?
  • What is the purpose of having a solid procurement strategy?
  • What are the various procurement types and approaches?
  • How to find the ideal procurement consulting agency for you?

What is procurement?

The official definition of procurement is: “the process by which an organization buys the products or services it needs from other organizations”. However, as literal as this definition is, at UCT (Asia), procurement involves so much more.

Proper procurement can help an organisation achieve its business objectives by sourcing their required goods and services in the most ethical and profitable way possible. This is even more important when you are sourcing from overseas or in unfamiliar territory, such as Asia for example.

Optimal procurement can be achieved with the following:

  • Proper cost optimisation
  • Reviewing suppliers thoroughly from the perspective or mergers and acquisitions
  • Implementing digital transformation
  • Building reliable supply chains
  • Transforming the internal procurement functions of a business
  • And more…

How can a procurement consultancy benefit you?

Again, handling every aspect of your business in-house can be stressful and complicated. By outsourcing certain requirements to a reputable third-party, you can leverage some attractive advantages. Here are some of the ways in which partnering with a procurement consultancy can benefit you:

  • Dominate market share
  • Remain at a steady and practicable liquidity level
  • Pivot and adapt to meet evolving customers’ expectations and economic, societal, and operational norms
  • Reduce the amount you spend on external suppliers
  • Remain profitable
  • Bolster and improve your supplier relationships
  • Simplify and streamline your supply chain
  • Gain a digital roadmap that can provide you with advanced operational, commercial, and risk-related data
  • Experience game-changing operational improvements
  • Reduce your stress levels and responsibilities

Whether you are sourcing from overseas (in Asia for example), or you have just set up a new business in unfamiliar territory, outsourcing your procurement requirements to an established third-party can be highly beneficial.

For example, UCT (Asia) is well-established throughout Asia, with an extensive network of suppliers and excellent working relationships. As a new business branching into Asia to procure certain commodities, utilising an existing infrastructure rather than going it alone can yield exceptional results.

What purpose does having a solid procurement strategy serve?

What is the purpose of having a procurement strategy? Think of your procurement strategy as a roadmap of sorts, offering a long-term procurement plan that accurately details how your organisation will be able to acquire and deliver the products and services which are essential to your operation.

A solid procurement strategy should include the following:

  • Your organisation’s wider objectives
  • Timeline and available budget
  • Accounting for additional procurement process costs
  • Identifying any and all potential risks
  • A means of achieving reduced costs
  • Clear direction toward increased operational efficiency
  • Data-driven evidence leading toward achieving strong business growth

Of course, specific procurement goals vary significantly from business to business, however, the objectives listed above are an excellent place to start and should be present in any procurement strategy designed for success.

What are the various procurement types?

If you are considering outsourcing your procurement requirements to a third-party procurement consultancy, it will help you to first have a thorough understanding of the various types of procurement:

  • Indirect procurement: Indirect procurement refers to all of the critical supplies and/or services that an organisation need to function. This can be broken down into categories such as: IT services, marketing, office supplies, and so on.
  • Direct procurement: Direct procurement refers to all of the things that make it into the final product bought by the customer. For example: raw materials, ingredients, or commodities.
  • The supply chain: The supply chain focuses on the logistics involved with receiving and delivering all of the necessary goods. This starts from the point of origin (e.g., the manufacturer), through to the end user (e.g., your customer’s doorstep).

How does a procurement consultancy approach the above processes?

There are many ways in which a procurement consultancy approaches the different procurement types. Let’s have a look at the various “approaches” below:

  • Spot buying: Spot buying refers to low value purchases and can involve securing three of four fast quotes at a time.
  • Strategic sourcing: Strategic sourcing is a more holistic approach which involves testing the market and exploring various suppliers and partners for high value / high-risk projects.
  • Operational sourcing: Operational sourcing can be considered the “middle ground” between spot buying and a full-blown strategic sourcing project.
  • E-sourcing / e-auctions: There are a wide variety of existing and emerging online tools that enable procurement consultants to execute the above processes in dedicated sessions, whilst bidding against various suppliers.
  • Preferred supplier lists: Procurement consultancies may in some cases create a qualified “preferred supplier list” that an organisation can work with. This often has multiple suitable suppliers, each of which can bid for work.
  • Single procurement: Single procurement refers to a situation when a customer orders a specific product, thus prompting the suppliers to produce and supply that specific item. This occurs often in business types that offer be-spoke products or work with high-value clients and may have special requests.
  • Stock procurement: Stock procurement refers to the process of periodically shipping and storing goods based on an agreed schedule or forecasted requirements. This may be seen in seasonal holidays and predictable volumes such as Christmas or Halloween.
  • Vendor managed inventory: VMI means that your supplier has control of your stock levels. This is an approach that can only work when you have a close and trusting relationship with your chosen supplier – otherwise it comes at great risk.
  • Just-in-time procurement: JIT refers to the process of keeping stock levels low and having commodities delivered just in time for when they are needed. This process relies heavily on well-optimised logistics processes and is becoming increasingly popular in the construction sector.
  • Just-in-sequence procurement: JIS is very similar to JIT, only it is designed even more strategically with accurate calculations at defined times, allowing for even greater efficiency.

How to find the perfect procurement consulting agency for you?

If you are interested in partnering with a procurement consultant, particularly in Asia, then here is everything you need to know before making any final decisions:

  • Is the consultancy independent and unbiased when recommended specific procurement solutions?
  • Does the consultancy in question have the proper credentials and experience to back up their claims of expertise?
  • Do they have any previous work or projects that they can show you?
  • What type of businesses have they worked with in the past and can they provide you with references and testimonials?
  • Are they happy to sit down with you to discuss the potential partnership thoroughly to ensure that your objectives are aligned?

*Note* – Make sure you ask a procurement consultancy exactly what information they need from you in order to avoid delays

The takeaway

At UCT (Asia), we understand just how difficult it is when trying to choose a procurement consultancy that you can trust. This is no minor decision and something that requires plenty of careful thought and consideration. This is why we will go to great lengths to ensure that we fully understand your business’ needs and objectives before moving forward – you have to be the right fit for us as well. If this is something that you would like to explore further, then please do not hesitate to contact us today.