Outsourcing Procurement: Pros & Cons

Will Your Company Outsource Procurement?

PurchTips Edition #424

If you’re in procurement, the idea of the outsourcing of procurement can be scary. The concept may give you a sense of job insecurity. It may feel like you’re competing for your own job.

But, on one hand, the more you understand the pros and cons of outsourcing procurement, the better you will be able to demonstrate why you, and/or your procurement department are the most competitive choice for the job. On the other hand, perhaps you could benefit by “switching sides”:  becoming a provider of outsourced procurement services.

Here are some common, potential pros and cons of outsourced procurement.  Not all apply in all situations.

Pros/Advantages:

  • Access to newer technology without capital investment
  • More flexibility for fluctuating or seasonal headcount requirements
  • Lower cost
  • Expanded knowledge of supply base due to interactions with the same suppliers for multiple customers

Cons/Disadvantages:

  • Less integration with key internal functions
  • Slower responsiveness
  • Lack of control of chosen personnel and their interactions with internal customers and the supply base
  • Inhibited ability to collaborate for competitive advantage
  • Difficult to reverse if the top-level talent is displaced for an outsourcing initiative that fails to meet expectations

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Copyright 2018. This article is the property of the Next Level Purchasing Association and may not be copied or republished in any form without the express written consent of the Next Level Purchasing Association. Click here to request republishing permission.

By Charles Dominick, SPSM, SPSM2, SPSM3

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