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Procurement outsourcing 'set for growth this year'

8 April 2010

More businesses are expected to outsource their procurement operations as a method of saving money this year, according to a new report.

Findings from ICG Commerce indicate that more than 20 per cent of the largest consumer goods companies in the US have signed procurement outsourcing deals since the strategy first emerged as a business concern in 2006.

"Based on increased pressure to quickly meet changing business demands, consumer products companies continue to be the leading adopters of procurement outsourcing," commented Rachael Stormonth, senior vice-president at research firm Nelson-Hall.

She added that large organisations in the consumer sector view outsourcing as a way to "reduce non-core costs and increase the effectiveness of their procurement".

Last month, a report from the Everest Research Institute forecast growth of 20 per cent for the procurement outsourcing market in 2010.

The study also noted an increase in such activity for 2009, although the average contract value decreased as buyers took a conservative approach in response to economic conditions.

Jo Sands, Principal at OdgersInterim added: "With the anticipated rise in Procurement Outsourcing (PO) as organisations outsource non core and non-strategic activities, lies an opportunity for the experienced PO Interim Manager. Clients increasingly choose to parachute Interim Procurement Management in to the organisation through this transition.

The Interim Procurement professional (IM) benefits the organisation undertaking procurement outsourcing as the IM has a wealth of previous PO experience to manage the outsourcing deal, ensure structure, processes and the 'right' professionals are in place, service levels are achieved and the 'value' of the outsourced deal is realised.  This role is essential as any outsourced partner needs to be managed effectively if the organisation is to realise its true value. Interim Managers with a successful track record in this space are a valuable asset to organisations as they will have the 'scars'of previous experience and so spot the opportunities and risks of undertaking such an activity.

The increase in PO activity has a direct benefit to the procurement function as it enables internal procurement to focus on more strategic activities such as Supplier Relationship Management and should enable the rise of procurement profile to the top table.

Odgers Interim are UK leaders in Interim Management solutions for the Commercial Sector. We have offices in London, Birmingham, Leeds, Manchester, Glasgow, Aberdeen and Cardiff as well as over 50 offices globally. We are the only Interim Management providers who are part of a top tier international executive search firm. We work closely with our executive search colleagues to find candidates who can offer short term solutions with long term benefits.

Categories: Consumer


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