Procurement Service Provider Basics

The State of Massachusetts has defined Procurement as "the process to obtain materials, supplies, contracts at the best price reasonably available through open and fair competition." Procurement Service Providers are a rapidly growing trend in supply management.  Many world-class organizations have already contracted with PSP's and estimates show that nearly half of U.S. companies are considering using PSP's in the next five years.   Please read the information below to learn more abut PSP's.

What is a Procurement Service Provider?

A Procurement Service Provider, or PSP, is a third party organization which is used to supplement internal procurement departments. PSP's have their own staffing which assist in a variety of tasks for their clients.  These tasks include: strategic planning, best practices, supplier rationalization, supplier collaboration, and negotiation.

"Enterprises utilizing PSP's have been able to improve spending coverage, reduce costs for goods and services, employ industry best practices, leverage the latest procurement technologies, and streamline source-to-pay processes - all without taking on the risks and assets required to achieve such results."                            {Aberdeen Group Research Abstract You Will Outsource Procurement: Here's Why and How - October 16, 2002)

Why use a Procurement Service Provider?

At most organizations, it is very expensive and difficult to maintain domain expertise in every category of spend.  Using a PSP avoids the burdens of procurement infrastructure for non-strategic categories. A PSP can provide a rapid analysis of an organizations spend and implement changes, negotiate with suppliers, and use proven industry best practices.  A good PSP will become an extension of the organization's existing procurement resources, in a non-obtrusive fashion.

"...research of enterprises that have outsourced management of specific procurement processes and/or specific categories of spending have been able to achieve material cost reductions that average between 10% and 25%.  In some cases, material cost reductions topped 30%."
(Aberdeen Group Research Abstract You Will Outsource Procurement: Here's Why and How - October 16, 2002)

How do I use a Procurement Service Provider?

SourceOne would redefine Procurement service in India by its unique delivery model. SourceOne works on a contingency basis, so there will never be any up-front fees, we only profit when you profit. please write us at sales@msourceone.com for more details.