A firm’s procurement department plays an integral role in the company’s operations, and it can help increase profits if approached correctly. Procurement Consultanting can help firms assess their current costs, analyze the pros and cons of possible suppliers, conduct a competitive analysis of suppliers, negotiate contracts with suppliers, and implement a strategic supply chain that best meets the needs of their clients or industry.
How To Hire A Procurement Consultant?
The value of a Procurement Consulting is particularly apparent when trying to obtain or assess an existing contract. Procurement consultants can help firms assess their current costs, analyze the pros and cons of possible suppliers, conduct a competitive analysis of suppliers, negotiate contracts with suppliers, and implement a strategic supply chain. A firm’s legal counsel may be able to advise whether it is required to hire a procurement consultant for certain activities however, some activities are optional and others require consultancy services regardless of size or industry.
If you’re in a trade or other regulated industry, legal counsel or an internal compliance officer may advise whether hiring a procurement consultant is required. Some consulting services are optional, while others are mandatory regardless of your company’s size or market. For example, if your firm intends to buy goods or services from out-of-state sellers, you may be required to use a Data Procurement consultant for goods purchased on state contracts worth more than $50,000 per year. Or if your company sells medical devices used in healthcare settings, it will have to register with Medicare as a supplier and must use consultants to help negotiate and obtain government contracts with federally-funded hospitals and clinics.
While procurement consultants provide companies with a lot of value, companies need to be careful when choosing one. Procurement Consulting is not for everyone. Companies that are already pretty good at procurement don’t necessarily need help from consultants. A company might also want to consider a consultant if it needs help in areas such as strategic sourcing or demand planning but not if it needs expertise in areas such as planning and scheduling or vendor negotiations. Choose a consultant who can bring clear value-add to your business rather than selecting one based on low cost alone.
When choosing a procurement consultant, companies should consider several important factors. One is whether a firm has the good industry knowledge, which enables it to advise on industry-specific concerns and business strategies. Another factor is how hands-on a firm is does it rely heavily on an external network of experts or does it have in-house subject matter experts? Companies also need to think about whether they want help in only one area of procurement or across multiple areas. For example, some firms hire consultants for strategic sourcing while others hire consultants to handle all types of procurement tasks. Another factor is whether a firm offers services such as integrated project management and reporting on implementation and ROI success rates or just generic consulting services. If you are planning to use a Procurement Consultant make sure that you choose someone who will bring clear value add and not just someone who will save you money by cutting corners.
What To Expect From Your Procurement Consultant?
There are two big reasons why companies employ Procurement Consultants to reduce costs and to improve profitability. The more you know about a consultant’s experience and services, therefore, those factors will help you determine if working with one is right for your business. Let’s look at some of their roles. First and foremost, these experts are arbiters between manufacturers or distributors referred to as suppliers on one side, and buyers on the other doing research and comparative analysis in search of new or lower-cost options that offer greater value.
Should you contact a consultant directly or work with an accounting firm or law firm that specializes in these services? Smaller firms sometimes retain an expert as needed, but larger enterprises frequently hire outside experts to do so. The choice typically depends on your needs and how extensively you plan to use procurement services. No matter what you decide, take time before embarking on any course of action to research consultants carefully and make sure they have specific experience working in your industry. They should also offer Procurement Consulting references from clients who have used their services. Finally, before signing any agreement, be sure it includes enough details about fees, due dates for delivering results, and compensation for providing specific deliverables like information about potential suppliers and details of new sources for reducing costs.