Procurement Services Questions
Discussion
Hi All,
I'm at the start of the process of setting up a procurement services company and I'm looking to pick all or at least some of your brains.
I've been in procurement for over 20 years and I'm hoping to go out on my own in the next year full time. My aim is to offer procurement services to the SME sector and I would love if you could give me some feedback on the below points.
1. Do you value what a specialist procurement professional can bring to your company.
2. Who does your procurement currently.
3. How do you manage your procurement, independent procurement software, sage or the like or excel.
4. Would you be happy bolting on a company to do your procurement for you.
5. If you were going to employ a procurement professional, would you go to an agency who specialise in procurement people or would you use one of the bigger companies.
6. Would you be interested in procurement software that tracks your order from cradle to grave.
I have more questions but Im sure the above is enough to annoy for now.
Thanks in advance
I'm at the start of the process of setting up a procurement services company and I'm looking to pick all or at least some of your brains.
I've been in procurement for over 20 years and I'm hoping to go out on my own in the next year full time. My aim is to offer procurement services to the SME sector and I would love if you could give me some feedback on the below points.
1. Do you value what a specialist procurement professional can bring to your company.
2. Who does your procurement currently.
3. How do you manage your procurement, independent procurement software, sage or the like or excel.
4. Would you be happy bolting on a company to do your procurement for you.
5. If you were going to employ a procurement professional, would you go to an agency who specialise in procurement people or would you use one of the bigger companies.
6. Would you be interested in procurement software that tracks your order from cradle to grave.
I have more questions but Im sure the above is enough to annoy for now.
Thanks in advance
1. Yes
2. In house procurement team
3. We use Delta E-sourcing
4. No, we have our own team You need to target those companies who are too small to have their own in-house procurement staff but big enough to be doing significant procurements. I'm not sure if there are many of those around.
5. I'm not aware of any specialist procurement agencies. I've always used Hays.
6. Not sure. I'm trying to think what we procure that would be time-critical
Countdown said:
1. Yes
2. In house procurement team
3. We use Delta E-sourcing
4. No, we have our own team You need to target those companies who are too small to have their own in-house procurement staff but big enough to be doing significant procurements. I'm not sure if there are many of those around.
5. I'm not aware of any specialist procurement agencies. I've always used Hays.
6. Not sure. I'm trying to think what we procure that would be time-critical
Thanks for the reply much appreciated.2. In house procurement team
3. We use Delta E-sourcing
4. No, we have our own team You need to target those companies who are too small to have their own in-house procurement staff but big enough to be doing significant procurements. I'm not sure if there are many of those around.
5. I'm not aware of any specialist procurement agencies. I've always used Hays.
6. Not sure. I'm trying to think what we procure that would be time-critical
What sector are you in, maybe that should have been question 7
Going by your answers and having a read at Delta E Sourcing website makes me think I have worded my questions wrong. Going by your reply you are the company giving out the procurement or have I got that wrong?. The service I'm trying to replace or introduce to a company is that of a buyer. I want to be able to either take the place of a buyer and introduce the software that the buyer would use throughout the purchasing cycle.
There seems to be a hell of a lot of procurement companies who are offering some sort of service for Public procurement but not so many for private. That's either because there is not a market for it or hopefully in my case I have found a gap.
Hopefully will help and won’t derail things, but my experience of procurement in and around SME (and larger business) has been very mixed. I also suspect that quite a few people, even those in your target market, won’t be able to answer most of the questions. Here’s why…
Procurement, as either a function or service, is often not well understood. It can be perceived (rightly or wrongly) as slow, bureaucratic, removing control/agility from users/specifiers of goods and services, and being inefficient. In some cases these complaints are justified (seems to end up in the wrong place in many organisations or sometimes attracts people who think the process/bureaucracy is more important than the business outcome), even if they’re not justified people fear change/don’t like relinquishing control. You’ll need a plan to deal with all of these sorts of concerns.
You mention public sector procurement services. Yes, there are good arguments for their processes, transparency, and features like tightly controlled AVLs especially for high value procurement, but if you pitch those sorts of things to SMEs (especially those who have been on the other side of public procurement) you might find the reception isn’t exactly warm.
Then you’ve got the type of goods/services to consider. Commodity, or generic fit/form/function specifiable items are (again rightly or wrongly) seen as easy to buy and harder to justify service charges for. However, the more bespoke you get the more harder it is to convince people to change and the more (sometimes technical) dialogue is needed for new or re-procurement especially if people are happy with the current supplier. For new requirements, where the spec isn’t yet known, you’ll need to expect that people will go off piste and around you…
Then you’ve got standard SME challenges to overcome: depending on sector and the good/services you want to procure, you may find that specs don’t exist or are outdated. Getting SMEs to spend time creating/updating needs real buy-in, which you’ll only get if people perceive it’s worth the effort. Oh, and they’ll also want to know who carries the can if something goes wrong.
You mention wanting to take the role of the buyer. This opens some financing, risk, and title considerations. What you probably want to avoid is being stuck with product or exposed to liabilities you don’t want. Your target customers will (or should) look at things the other way round and be thinking about whether/how they get comfortable with handing such a key business function to a new operator, especially if it’s a one-man band and whether you can actually bear the risks you’re carrying or deliver the level of service they want. I can imagine that might be a tough sell in O&G where the sums in play can be significant.
I’ve seen people make a play in the space in a couple of ways: BoM evaluation/management (often looking for pricing improvements on the commodity elements), inventory management, and kitting (where there’s production efficiency case to be made). I’ve also known a few outfits do very well indeed out identifying or sourcing of obsolete parts, especially MIL-SPEC stuff.
Where I’ve sometimes thought there was a gap in the market is for someone to really focus in on addressing single sources of supply (something that more companies may be looking for at present?). Even if you don’t have the volume to multi-source, knowing that you’re not tied in to your current supplier is something firms may value. Of course there are many gaps in many markets… but not every gap represents a business opportunity! If nobody is doing what you propose then step back and think carefully through the reasons you’d be the only operator.
Lastly remember that it’s the sort of service people often won’t have bought before so think through how you’re going to sell it (and to whom in a company you’ll pitch). Prospects will get turned off really fast unless they can quickly and easily see how what you offer is going to make their life and/or business better. You don’t want to waste lots of resource on sales and marketing but equally need to recognise that what you’re selling will be quite high involvement/high risk for your target customers and probably require people to stick their neck out to say yes. Unless you’re convinced that if you build it they will come, it might be worth trying to get one or two initial customers lined up before making the leap?
Procurement, as either a function or service, is often not well understood. It can be perceived (rightly or wrongly) as slow, bureaucratic, removing control/agility from users/specifiers of goods and services, and being inefficient. In some cases these complaints are justified (seems to end up in the wrong place in many organisations or sometimes attracts people who think the process/bureaucracy is more important than the business outcome), even if they’re not justified people fear change/don’t like relinquishing control. You’ll need a plan to deal with all of these sorts of concerns.
You mention public sector procurement services. Yes, there are good arguments for their processes, transparency, and features like tightly controlled AVLs especially for high value procurement, but if you pitch those sorts of things to SMEs (especially those who have been on the other side of public procurement) you might find the reception isn’t exactly warm.
Then you’ve got the type of goods/services to consider. Commodity, or generic fit/form/function specifiable items are (again rightly or wrongly) seen as easy to buy and harder to justify service charges for. However, the more bespoke you get the more harder it is to convince people to change and the more (sometimes technical) dialogue is needed for new or re-procurement especially if people are happy with the current supplier. For new requirements, where the spec isn’t yet known, you’ll need to expect that people will go off piste and around you…
Then you’ve got standard SME challenges to overcome: depending on sector and the good/services you want to procure, you may find that specs don’t exist or are outdated. Getting SMEs to spend time creating/updating needs real buy-in, which you’ll only get if people perceive it’s worth the effort. Oh, and they’ll also want to know who carries the can if something goes wrong.
You mention wanting to take the role of the buyer. This opens some financing, risk, and title considerations. What you probably want to avoid is being stuck with product or exposed to liabilities you don’t want. Your target customers will (or should) look at things the other way round and be thinking about whether/how they get comfortable with handing such a key business function to a new operator, especially if it’s a one-man band and whether you can actually bear the risks you’re carrying or deliver the level of service they want. I can imagine that might be a tough sell in O&G where the sums in play can be significant.
I’ve seen people make a play in the space in a couple of ways: BoM evaluation/management (often looking for pricing improvements on the commodity elements), inventory management, and kitting (where there’s production efficiency case to be made). I’ve also known a few outfits do very well indeed out identifying or sourcing of obsolete parts, especially MIL-SPEC stuff.
Where I’ve sometimes thought there was a gap in the market is for someone to really focus in on addressing single sources of supply (something that more companies may be looking for at present?). Even if you don’t have the volume to multi-source, knowing that you’re not tied in to your current supplier is something firms may value. Of course there are many gaps in many markets… but not every gap represents a business opportunity! If nobody is doing what you propose then step back and think carefully through the reasons you’d be the only operator.
Lastly remember that it’s the sort of service people often won’t have bought before so think through how you’re going to sell it (and to whom in a company you’ll pitch). Prospects will get turned off really fast unless they can quickly and easily see how what you offer is going to make their life and/or business better. You don’t want to waste lots of resource on sales and marketing but equally need to recognise that what you’re selling will be quite high involvement/high risk for your target customers and probably require people to stick their neck out to say yes. Unless you’re convinced that if you build it they will come, it might be worth trying to get one or two initial customers lined up before making the leap?
LooneyTunes said:
Hopefully will help and won’t derail things, but my experience of procurement in and around SME (and larger business) has been very mixed. I also suspect that quite a few people, even those in your target market, won’t be able to answer most of the questions. Here’s why…
Procurement, as either a function or service, is often not well understood. It can be perceived (rightly or wrongly) as slow, bureaucratic, removing control/agility from users/specifiers of goods and services, and being inefficient. In some cases these complaints are justified (seems to end up in the wrong place in many organisations or sometimes attracts people who think the process/bureaucracy is more important than the business outcome), even if they’re not justified people fear change/don’t like relinquishing control. You’ll need a plan to deal with all of these sorts of concerns.
You mention public sector procurement services. Yes, there are good arguments for their processes, transparency, and features like tightly controlled AVLs especially for high value procurement, but if you pitch those sorts of things to SMEs (especially those who have been on the other side of public procurement) you might find the reception isn’t exactly warm.
Then you’ve got the type of goods/services to consider. Commodity, or generic fit/form/function specifiable items are (again rightly or wrongly) seen as easy to buy and harder to justify service charges for. However, the more bespoke you get the more harder it is to convince people to change and the more (sometimes technical) dialogue is needed for new or re-procurement especially if people are happy with the current supplier. For new requirements, where the spec isn’t yet known, you’ll need to expect that people will go off piste and around you…
Then you’ve got standard SME challenges to overcome: depending on sector and the good/services you want to procure, you may find that specs don’t exist or are outdated. Getting SMEs to spend time creating/updating needs real buy-in, which you’ll only get if people perceive it’s worth the effort. Oh, and they’ll also want to know who carries the can if something goes wrong.
You mention wanting to take the role of the buyer. This opens some financing, risk, and title considerations. What you probably want to avoid is being stuck with product or exposed to liabilities you don’t want. Your target customers will (or should) look at things the other way round and be thinking about whether/how they get comfortable with handing such a key business function to a new operator, especially if it’s a one-man band and whether you can actually bear the risks you’re carrying or deliver the level of service they want. I can imagine that might be a tough sell in O&G where the sums in play can be significant.
I’ve seen people make a play in the space in a couple of ways: BoM evaluation/management (often looking for pricing improvements on the commodity elements), inventory management, and kitting (where there’s production efficiency case to be made). I’ve also known a few outfits do very well indeed out identifying or sourcing of obsolete parts, especially MIL-SPEC stuff.
Where I’ve sometimes thought there was a gap in the market is for someone to really focus in on addressing single sources of supply (something that more companies may be looking for at present?). Even if you don’t have the volume to multi-source, knowing that you’re not tied in to your current supplier is something firms may value. Of course there are many gaps in many markets… but not every gap represents a business opportunity! If nobody is doing what you propose then step back and think carefully through the reasons you’d be the only operator.
Lastly remember that it’s the sort of service people often won’t have bought before so think through how you’re going to sell it (and to whom in a company you’ll pitch). Prospects will get turned off really fast unless they can quickly and easily see how what you offer is going to make their life and/or business better. You don’t want to waste lots of resource on sales and marketing but equally need to recognise that what you’re selling will be quite high involvement/high risk for your target customers and probably require people to stick their neck out to say yes. Unless you’re convinced that if you build it they will come, it might be worth trying to get one or two initial customers lined up before making the leap?
Hi Looney tunes, Procurement, as either a function or service, is often not well understood. It can be perceived (rightly or wrongly) as slow, bureaucratic, removing control/agility from users/specifiers of goods and services, and being inefficient. In some cases these complaints are justified (seems to end up in the wrong place in many organisations or sometimes attracts people who think the process/bureaucracy is more important than the business outcome), even if they’re not justified people fear change/don’t like relinquishing control. You’ll need a plan to deal with all of these sorts of concerns.
You mention public sector procurement services. Yes, there are good arguments for their processes, transparency, and features like tightly controlled AVLs especially for high value procurement, but if you pitch those sorts of things to SMEs (especially those who have been on the other side of public procurement) you might find the reception isn’t exactly warm.
Then you’ve got the type of goods/services to consider. Commodity, or generic fit/form/function specifiable items are (again rightly or wrongly) seen as easy to buy and harder to justify service charges for. However, the more bespoke you get the more harder it is to convince people to change and the more (sometimes technical) dialogue is needed for new or re-procurement especially if people are happy with the current supplier. For new requirements, where the spec isn’t yet known, you’ll need to expect that people will go off piste and around you…
Then you’ve got standard SME challenges to overcome: depending on sector and the good/services you want to procure, you may find that specs don’t exist or are outdated. Getting SMEs to spend time creating/updating needs real buy-in, which you’ll only get if people perceive it’s worth the effort. Oh, and they’ll also want to know who carries the can if something goes wrong.
You mention wanting to take the role of the buyer. This opens some financing, risk, and title considerations. What you probably want to avoid is being stuck with product or exposed to liabilities you don’t want. Your target customers will (or should) look at things the other way round and be thinking about whether/how they get comfortable with handing such a key business function to a new operator, especially if it’s a one-man band and whether you can actually bear the risks you’re carrying or deliver the level of service they want. I can imagine that might be a tough sell in O&G where the sums in play can be significant.
I’ve seen people make a play in the space in a couple of ways: BoM evaluation/management (often looking for pricing improvements on the commodity elements), inventory management, and kitting (where there’s production efficiency case to be made). I’ve also known a few outfits do very well indeed out identifying or sourcing of obsolete parts, especially MIL-SPEC stuff.
Where I’ve sometimes thought there was a gap in the market is for someone to really focus in on addressing single sources of supply (something that more companies may be looking for at present?). Even if you don’t have the volume to multi-source, knowing that you’re not tied in to your current supplier is something firms may value. Of course there are many gaps in many markets… but not every gap represents a business opportunity! If nobody is doing what you propose then step back and think carefully through the reasons you’d be the only operator.
Lastly remember that it’s the sort of service people often won’t have bought before so think through how you’re going to sell it (and to whom in a company you’ll pitch). Prospects will get turned off really fast unless they can quickly and easily see how what you offer is going to make their life and/or business better. You don’t want to waste lots of resource on sales and marketing but equally need to recognise that what you’re selling will be quite high involvement/high risk for your target customers and probably require people to stick their neck out to say yes. Unless you’re convinced that if you build it they will come, it might be worth trying to get one or two initial customers lined up before making the leap?
Thanks for the feedback, everything you have mentioned all makes sense and I go through most of the issues on a daily basis and that is me working on large International projects.
I do suspect the reason there are not so many companies offering this service to SMEs is due to that size of company not understanding or probably not really caring too much about procurement. In the public sector procurement is now a department that everyone is 100% aware of and whether they agree with it or not they know it has to be used.
I'm still early doors in this venture and I'm hoping at some point the USP will appear, the specialist recruitment side of my venture is one that is looking like it is an option but it is not my type of business so possibly need to get someone on board to venture into that.
All the feedback so far has been great and either confirming my thoughts or opening up new questions that need answered.
Providing services to the public sector seems to be fraught with headaches for both provider and in some cases for the public sector body seeking to procure the service.
Not sure if this is relevant to your proposed venture, but working for the private sector to remove bottle-necks in the process could be valuable to those providers large enough to offer service but not large enough to justify permanent in-house procurement specialist.
Not sure if this is relevant to your proposed venture, but working for the private sector to remove bottle-necks in the process could be valuable to those providers large enough to offer service but not large enough to justify permanent in-house procurement specialist.
Having spent 25 years working in large corporates and navigating internal procurement processes that became increasingly more cumbersome as the years went by, one of the most enjoyable things about starting my own business was the ability to have complete control over the purchasing lifecycle. I found I could complete a task in 1/2 day, that would have taken 6 months in my previous job.
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