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Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy
Procurement Services — Everything a Procurement Professional Should Know
Key take-aways
- The only difference between procuring products and services is that the former is the acquisition of raw materials, while, on the other hand, the latter is the acquisition of important supplies and/or services.
- Much like acquiring raw materials to make new products, procuring services has also a tedious process.
- Using an MSP and/or VMS to manage procurement services is beneficial, especially since it improves acquisition quality and saves money.
For anyone who has deep knowledge in procurement, the acquisition of procurement services can be both an exciting and anxious experience. Exciting because it means managing a whole different team of procurement analysts and being anxious because you have no idea what’s going to happen during the whole procurement process.
For this article, we are going to take a look at how procurement professionals should handle procurement services.
After reading this article, you’ll be an expert on procurement services that you’ll be promoted to procurement head of your company in no time at all.
Procuring Products vs Procuring Services
The term shouldn’t be too confusing for you. Procuring products means procuring raw materials that are used to develop or manufacture a product.
As for procuring services, this can be sourcing the services of an individual or team to create the product or to do maintenance for the machines used to build or create the product.
DefiningProcurement Services
To avoid confusion, we’ll be straight with you; procurement service is pretty much the same as procurement processes. Its definition is also the same; it’s the acquisition of important supplies or services in order to help a company grow or for its continuous operation.
Companies that need to procure or buy supplies for their daily operations require a process called indirect procurement. Whereas, companies that spend a good deal of money and effort in looking for good supplies to grow a specific department within the company use a process called direct procurement. We’ve already covered this particular topic in our indirect procurement article, but it never hurts to give a little piece of information to our beloved readers!
Now, depending on what your company needs, you’ll have a better idea of the kind of procurement services you need once there is a need for getting supplies or services. Most companies would issue an RFP or request for proposal. The document would state what kind of service or supply they need for the procurement. Once the proposal is approved, the procurement team can start sourcing suppliers who can provide the material or service that is needed.
Examplesof Procurement Services
- A company hires a team of website developers to oversee a project. The project is a software product that will be launched to the public. The team of website developers does QA work and tests the product before it is released.
- A small store hires different services to improve the workplace. Services such as pest control, inventory management, waste removal, anything that can help maintain or improve the quality and efficiency of the office are examples of procurement services.
- A company contracts an adviser on how to improve its procurement team’s sourcing processes.
What Does the Ideal Procurement Services Look Like?
Are you gasping for straws over what good procurement services look like? Look no further then.
We’ve created this very simple process over how an ideal procurement service would look like. You are free to copy the system or modify it on your own. However, if you really want to succeed as a procurement manager, take the course and learn from our very best and brightest.
So without further ado, here are what you should look for when building the process for your very own procurement services:
1. Workflow approval
The approval for the workflows in the procurement system should be quick and easy. The automation feature of an e-procurement system does just that. What takes months or weeks for a procurement manager to follow up can now be achieved in a few days.
2. Spend Reporting
After the whole procurement process, there is always the checking of how much did your procurement go in terms of company spending. A program that can track your company’s spend footprint is a good find, so make sure to get a system that offers this particular feature.
3. Integrations
Integrations are important because procurement is not just about one process, but is made up of many processes. A procurement software that includes integrations to many other procurement processes is another great find, so go ahead and get that program if it does offer integrations!
4. Cloud hosting
Nowadays, procurement systems are now run on cloud hosting. It offers endless possibilities and data security as well. Self-hosting your procurement software is asking for trouble since the process is already outdated and has many flaws.
5. Vendor management
Procurement systems can now check and assist vendors with regard to the procurement process. Keep an eye out for procurement systems that offer vendor management as these programs can help you in assessing vendor performance, managing contacts, and onboarding vetted suppliers.
6. Three-way matching
Good working procurement systems should have three-way matching functions in their programs. This particular matching system eliminates procurement fraud by cross-checking invoices, goods receipts, and purchase orders. All of these are checked before payment is issued to the vendors.
7. Customization
Most procurement systems are designed to handle multiple functions in case the organization needs to do other procurement processes too, such as sourcing, product and market research, and others. Companies of all sizes and types should get a procurement system where they are able to customize the program to how they see fit.
Is it Better to AcquireE-Procurement Service?
Nowadays, there are a lot of e-procurement services available for procurement teams to use and avail of. Personally, we believe in the efficiency of these programs.
These are software designed to help small to middle-sized procurement teams in building their own procurement process. The best thing about these programs is that they allow the team to spend manpower on actual procurement processes that matter. Other smaller procurement tasks, such as approving budget proposals and checking documentation should be given to the program itself.
Most e-procurement systems have automated programming that allows them to do market research, sourcing tasks, and other data-relevant work that is important for the success of the procurement process. As such, it is now the job of the procurement manager or analyst to make sure that the company gets a good federal procurement data system that can really help with automating the procurement process while following important company standards.
A procurement system is a detailed and automated process of buying goods for the company. The procurement system is also responsible for maintaining the inventory system of the company. These days, it is a program designed and bought specifically to help the company in how it spends its budget for procurement as well as managing the supplies that were bought.
Some of the other processes that a procurement system takes care of automatically are as follows:
- Generating purchase orders
- Sending purchase requisitions
- Approving delivered services/goods
- Selecting/managing vendors
- Reviewing invoices
The future is all about procurement services using this software to keep the procurement team working at double efficiency without sacrificing too many of its members. It’s always a great idea to invest time and money in these automated procurement services and to do away with the traditional paper-type procurement process of the past.
Can Procurement Servicesbe managed through an MSP/VMS?
A few years ago, technology and services were used to track outsourced workers, usually concentrating on headcount tracking, risk mitigation, and visibility.
However, with the improvements made to the functionality of MSP/VMS, many companies began hiring and managing experts via a VMS/ MSP. All in all, it has helped many companies due to its capabilities.
Benefits of Managing Procurement Services Through an MSP/VMS?
Here are some benefits of managing procurement services through MSP/VMS systems that you may want to know.
1. Enhanced quality
Having experts working and managing the bidding process in the organization allows for quality improvements.
This happens by tracking supplier performance and optimization, strong RFP process, detailed spending analysis, and reports on deliverables.
2. Cost savings
Cost savings can be achieved through supplier and contract management negotiations, competitive biddings, enhanced supply chain management, efficient processes, and improved budgetary controls.
As project-based work can be one of the most crucial spending categories for human capital within an organization, it’s important that those services are procured as cost-effectively as possible.
3. Enhanced workload management
MSP/VMS enables procurement to become more strategic to the organization. This is acquired by freeing up time they would spend trying to manage multiple projects throughout numerous business lines.
4. Increased in compliance
Having a centralized service procurement gives greater control and visibility over the category spend.
Additionally, it can mitigate security risks and ensure suppliers comply with all the policies of the company.
Also, it makes the organization respect state and federal wage hours laws, overtime implications, employee benefits, employment tax, and worker’s compensation.
5. Best practices
The MSP/VMS offers industry best practices that it collected from managing other clients’ service procurement spending.
This particular matching system eliminates fraud by cross-checking invoices, goods receipts, and purchase orders.
Conclusion
In conclusion, this article provides valuable insights into the dynamic realm of procurement services, offering seasoned professionals guidance on handling the acquisition of essential supplies or services.
Distinguishing between procuring products and services, it outlines the characteristics of ideal procurement services, emphasizing key factors like workflow approval, spend reporting, and integrations.
The rising prominence of e-procurement services is highlighted for their efficiency in automating tasks, while the synergy of Managed Service Provider (MSP) and Vendor Management System (VMS) is explored for its benefits in enhancing quality, achieving cost savings, streamlining workload management, ensuring compliance, and incorporating industry best practices.
Aspiring procurement managers are encouraged to embrace these advancements for heightened efficiency and success in the ever-evolving landscape of procurement services.
Frequentlyasked questions
What are procurement services?
Procurement services means getting extra help to manage or maintain your company in order to keep it operating.
Why are procurement services important?
A company will need outside help from time to time. It is also cheaper to get procurement services instead of hiring an expert to do the job.
What does MSP/VMS mean?
MSP/VMS simply stands for two kinds of management systems. MSP stands for Managed Service Provider while VMS stands for Vendor Management System. The difference between the two is that the former is managed mostly by people with the assistance of technology while the latter does not require expert human support and relies solely on software.
About the author
My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.