Companies not to use procurement service providers to manage supplier relationships: ISG

According to a latest research report published by ISG in association with GEP, companies are less likely to handover their supplier relationship management functions to business process management (BPM) providers to manage.

The survey report titled “GEP Value Trends: Procurement Outsourcing” states that there is an increase in the adoption of procurement services offered by procurement service providers by the companies in North America and Europe. Report also concluded that procure-to-pay operations are increasingly handled by the service providers.

The survey was commissioned by ISG (Information Service Group), leading market intelligence and advisory services company and GEP, a global procurement service provider. The respondents of the survey included leaders from financial services, business services, manufacturing, healthcare and pharmaceuticals, public sector, energy, media and telecom, retail and transportation industries.

Insight Into Procurement Outsourcing

The survey report primarily provides insight into:

  1. Trends in adopting procurement services
  2. Drivers to adopt procurement services
  3. Satisfaction of the service offerings
  4. Cross functional participation and decision makers in hiring procurement services
  5. Executive relationship role in making procurement service sourcing decision
  6. Role of brand in selecting the service provider.

Procurement Outsourcing Highlights

Key highlights from the report:

  1. According to the report, the procurement services industry has matured over the year. The report claims that the industry now focuses more on capability expansion and growth. The services providers have been able to attract more clients by focusing on managing the total spent by companies better.
  2. Currently, contract management and transactional procurement functions are the most common procurement services provided by the service providers. About 14% of the respondents have completely hired the service of procurement service provider to manage contract management and transactional management functions.
  3. About 24% of the respondents plan to buy procurement services to manage their transactional procurement and 21% plan to buy the service.
  4. According to the report, financial service firms are the most reluctant in hiring the service of procurement service provider and respondents from manufacturing industry are the greatest adopters of procurement sourcing services.
  5. Majority of the respondents stated that improved focus on sourcing, access to scarce skills and need for best practice to support business are the key drivers in sourcing the service of procurement service providers.
  6. 37% of the respondents quoted that they would prefer service provider who can help them with other business functions also.
  7. According to the report, while 82% of the respondents are satisfied with the services provided by the procurement service provider, 9% of them are not satisfied and rest of them was not able to say as whether they are satisfied or not.
  8. The study found that there was cross functional participation in organizations, to decide with regard to sourcing of procurement services.
  9. About 43% of the respondents said that the brand and capabilities of the supplier matter most while selecting the service provider.

The report can be downloaded by following the link.

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