3 service sourcing strategies to manage shared service centers effectively that will make you 15% savings rapidly
There are many ways on how the Procurement Processes can be enhanced.
One Principle which I came up with when designing a Concept for a Shared Service Center.
For the Client the following question was essential: Which processes to keep inhouse and which processes to outsource.
We defined these key performance indicators :
- How an Outsourcing Provider keeps the quality standards
- and if yes, which activities can be outsourced that have the highest impact on improving process costs.
Following the key performance indicator goals, we outlined 3 options:
- Outsourcing Invoicing to the Outsourcing Provider as the Provider had cheaper labour and a dedicated team, which the Client did not have to deliver bundled invoices to the various suppliers on time in order to receive the payment under the set date, which was defined in the contract conditions.
- Operation costs where the operative topics such as keeping the master data of the vendors in place – the master data hosting process, meaning having a database where again a dedicated team, who have lower wages keep track of this process in an alignment with the client, which was the procurement headquarter department.
- Outsourcing Office Material and “no frill” products, where the entire purchasing of the category was outsourced as the outsourcing provider had the cheapest products, with the same quality as the current Client Vendors and could even reduce further prices as more stock could be purchased and stored at the territory of the Outsourcing Provider.
As we calculated in the team we came up with more than 15 % savings based on the Procurement Processes in the future, just in stating and aligning three examples for the Client
What I learned here was, that there are many opportunities once you think of what can be enhanced in terms of optimising the procurement processes to save costs longterm for a corporation.
Make sure that you draw these 3 opportunities of Procurement Processes up in the upcoming week.
Again, quality needs to be kept, so you should select 3 processes where you believe they do not harm the quality, as you will get into many discussions here and they might be hard to change or to adapt.
I wish you all the best in doing this exercise in your organization – and for questions, just reach out and I hope I can help you and advice you on your topics in the area of Sourcing & Procurement in Corporations.
Philip David MBA, specializes in crafting your breakthrough service sourcing strategy, evaluating and choosing your strategic service providers, developing your business case for optimizing your total service cost of ownership and leading your implementation project for delivering sustainable results rapidly.
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