As the newest of the purchasing class, procurement outsourcing is often neglected by organizations considering the investments made in e-procurement solutions, especially in order to optimize costs. The strategic impact would be then more significant if companies were taking advantage of it.
Non-strategic purchases are usually scattered over all the services and entities of a group characterized by a low average basket but high hidden costs, making outsourced purchases undoubtedly the purchase category for which it is most relevant to invest in an e-procurement tool. “Most of the expenses of an outsourced purchasing product is related to the transaction and not to the product itself,” says Xavier Laurent, CPO at Manutan. Meaning that if the ordering process is expensive, it’s counterproductive.
Outsourced purchases are not driven by dynamics provided by general management but are in fact, far from being buyers’ priority. According to Xavier Laurent: “the less strategic it is, the more necessary it will be to make purchases transparent, and costs as little as possible”. Thinking about “full cost” is therefore particularly strategic for this type of ressources. Digitization of order and invoicing procedures is precisely an effective way to obtain: visibility, control and rationalization of these costs.
If Procure-to-Pay tools are popular with buyers, they’re usually not used on outsourced purchases. However, the company Manutan surveyed the purchasing behaviour of 500 of their customer accounts and revealed that those using an e-procurement solution for this type of purchases have seen a 38% decrease in order claims. “Just by digitizing order processes, businesses can divide by four the total price of orders and manage hidden costs better”
Consequently, even used partly without implementing all the functionalities (e-catalogue, e-purchase and e-invoicing), an e-procurement solution can really be significant: “We cover all categories of outsourced purchases so we get a broad visibility into this type of orders. We’ve noticed a large room for improvement in terms of purchasing performance!” says Xavier Laurent. Numbers speak for themselves: Of Manutan’s 522 key account customers, only 25% have implemented an e-procurement solution. Of these 25% the solution’s utilization rate was only 50%. “Digitization can help procurement outsourcing experts transform into a much more strategic business than it is today” says Xavier Laurent.