Factors to Consider When Deciding Between Building an Internal Team or Outsourcing
Chase Cost Management has found that rapidly growing organizations in either paradigms #1 or #2 typically come to a fork in the road and must decide whether to have a dedicated internal procurement team or rely on an outsourced team to manage the procurement process. Deciding on whether to begin building an internal team or outsource should be based on a few factors including
Six Key Factors
Core Competency
Building an internal team may be more appropriate if this function focuses on a strategic area directly related to your core business. However, outsourcing can be a viable option if it is not a core competency and does not differentiate your organization.
Expertise and Specialization
If your procurement requires in-depth knowledge of changing products and services and those skills are not readily available internally, outsourcing to a specialized provider can offer access to a higher level of expertise.
Cost Considerations
Compare the costs of building an internal team versus outsourcing. Building an internal team entails recruitment, training, salaries, benefits, infrastructure, and ongoing management costs. On the other hand, outsourcing typically involves a contracted fee or payment structure and can start functioning on day one.
Time and Speed
Consider the urgency and time sensitivity of the function. Building an internal team takes time, as it involves recruiting, onboarding, and developing the team’s capabilities. If time is of the essence and immediate results are needed, outsourcing can provide a faster solution by leveraging existing resources and expertise.
Organizational Culture
Take into account your organization’s culture and values. Often this function requires close integration with the internal team or specific cultural considerations; building any team (internal or outsourced) requires careful personality and professionalism alignment to ensure seamless collaboration.
Scalability and Flexibility
Organizations may want to test the concept of bullying a procurement function, and it is difficult with internal hires. In addition, outsourcing can offer flexibility through resource allocation and the ability to adjust service levels as needed if the workload fluctuates or if there is a need for rapid scalability. Building an internal team may provide more control but lack the agility to adapt quickly to changing demands.
McKinsey states, "Deciding whether to outsource strategic buying in a particular category requires the same thought and analysis as any other make-or-buy decision. "
Companies facing decisions on deploying a new procurement function should carefully weigh their options, as the benefits of outsourcing vary significantly from organization to organization.
Is your organization at a crossroads, weighing the decision of establishing or augmenting your procurement function? Let CCM, a trusted third-party expert in vendor management and procurement outsourcing, be your guiding light. With our specialized procurement assessment, we dive deep into your current operations, unraveling the gaps and untapped potential. By understanding your unique needs and long-term vision, we collaborate closely with your team to build a customized roadmap that aligns with both your short-term objectives and long-term aspirations. CCM’s tailored solutions optimize your procurement processes, unleashing cost savings, enhancing supplier relationships, and driving sustainable growth.
Don’t just take CCM’s word for it; let the success stories of other growing businesses that have benefited from outsourcing procurement be the social proof that builds trust and credibility. With a dedicated procurement team, your business can reach new heights of success.
Stay tuned for our following blog posts: Unveiling Our Procurement Assessment Blog Series – Addressing Gaps and Empowering Your Organization. Join us as we delve into the specifics of our assessment process, explore the areas it covers, and highlight how our expertise helps organizations tackle identified gaps. Stay tuned for actionable insights and practical strategies to empower your organization to optimize procurement, bridge the optimum, and achieve stable and transparent results.
