Companies, Purchasing, Procurement, Strategies

Companies target more than purchasing in their procurement strategies

Corporate procurement organizations that have begun to rely on outsourcing some of what they purchase to save money are now looking to third-party providers to perform some of their management processes in an effort to sharpen their focus on more strategic activities, according to the results of a new AberdeenGroup survey.

The results of the survey appear in a new Aberdeen benchmark report, 'The Procurement Outsourcing Benchmark Report.' The survey examines the factors causing enterprises to consider outsourcing procurement functions or processes, as well as the benefits companies have received and plan to receive from outsourcing, along with what they're outsourcing. In addition, the survey reveals the reasons many companies are not outsourcing procurement work, chief among them a perceived loss of control.

"Our survey found that companies that are outsourcing some of their procurement work are lowering costs and easing the workload in the procurement organization," says Rick Saia, an Aberdeen research analyst and lead author of the report. "That's a key benefit companies receive from outsourcing. But what's more important is that procurement organizations have a strong handle on most, if not all, of corporate spend. However, we found in the survey that only one in every five companies that are planning to jump into outsourcing over the next two years has at least two-thirds of spend under management. That's alarming."

The report shows how leading, or Best in Class, procurement organizations that outsource some of their work are more likely to be led from the center, under the oversight of a vice president or director-level officer.

The Aberdeen survey also found that -- at least among companies that are already outsourcing some of their procurement work -- more functions and processes will be outsourced over the next 12 months, from an average of 18% of all procurement work, to 21%.

To download a complimentary copy of the report, go to: http://www.aberdeen.com/link/source.asp?cid=3100&pid=PR060606