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.
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