The Outsourcing of Purchasing

If you've read "Will This Purchasing Trend Take Your Job" and are worried, let me help.

The thing to remember is that outsourcing any function is a way of spending money to save money. Getting a return on an investment with an outsourced supplier.

Third party procurement providers sell themselves based on return on investment. "You spend $1 million with us, you'll save $3 million."

Cut them off at the pass. Before they even have the opportunity to make their pitch to your senior management, you should already be calculating your return on investment.

If you're a buyer, you should be calculating your salary plus overhead (add 30 - 50% to your salary) and comparing that expenditure with the amount of money you are really saving your company.

If you are a manager, you should be comparing your department's annual budget with your department's annual savings.

You should be saving more money for your company than your company is spending on you or your department.

And - this is really important - you should be reporting your return on investment to management. They may think of your pay or your budget as a cost, not an investment unless you are continually and persuasively communicating your value.

Beat the third party procurement providers at their own game. But do it before you are placed in a situation where you are essentially bidding against them.

Do you have thoughts on this issue? Click the comments link below to share them!

Good luck!

Respectfully,
Charles Dominick, C.P.M., SPSM
President
Next Level Purchasing, Inc.