The business environment at a macro-level has never been more challenging. Business expenditures are rising. The competitive landscape is becoming increasingly difficult. Technology is changing at a faster pace than our employees can keep up with. At every junction managing relationships with key vendors is becoming more and more critical and difficult. Developing strategic alliances, while evaluating, planning, negotiating, and implementing complex operational tactics requires a delicate balance.
It’s not surprising that the biggest vendor management challenges can vary depending on the company type and size. Regardless of size, however, there are 3 common challenges that most companies face:
1. COLLECTING DOCUMENTATION
2. MANAGING VENDOR RISK
3. OPTIMIZING COSTS/CONTRACTS AND NEGOTIATING BEST IN CLASS RATES
The complexity of Vendor Management creates problems for customers such as:
- Overcharged for goods & services
- Crippled by poor contractual terms & conditions
- Unable to easily access necessary documentation
- Unaware of critical vendor compliances
- Burdened by 100’s even 1000’s of different vendors
- Varying charges
- Differing rates, terms, and conditions
- Ever changing points of contact
There are several reasons for this to be the case:
- Vendor Management is assigned to ill-equipped internal resources.
- Superior Knowledge & Expertise needed isn’t readily available
- The Appropriate Focus and/or Attention to Detail is lacking
- Thorough Audits are NOT Performed Consistently
- Lack of a Continuous Analytical Process to Evaluate Savings Opportunities
- Benchmark Analytics for Contracts or Rates re-negotiation is Unavailable
- Lack of Superior Technology
- Lack of Strong Written Processes
- Poor or NO Document Management System
- Lack of Commitment to Management of the Process
- Lack of Resources
- Lack of Business Continuity for employee turn-over
- Bottom-line just not enough Time
Outsourcing services can be beneficial for businesses for several reasons. Let’s look at what we feel are in the Top 9 Reasons to Outsource Cost Reduction Services:
- One of the primary advantages is that it significantly lowers costs and improves efficiencies.
- Performing a certain job function internally costs a specific amount, which can be avoided by outsourcing.
- You can reduce these costs by outsourcing this job to an external party, often in a less cost-intensive manner.
- Outsourcing non-core activities can improve internal efficiency and productivity because another entity performs these tasks better than the firm itself due to; benchmark analytics gained buy the outside resource through years of diligence and intelligence gathering.
- This strategy may also lead to faster turnaround times for bottom-line effectiveness, increased internal output, and improve profits.
- Your business can rapidly reduce cost without the financial commitment of utilizing or hiring in-house employees, managing, leading, training, supporting, disciplining and avoid the costs which can take years to break even on. Often outweighing the benefit.
- While you should always keep you eyes on expenses, almost inevitably the information necessary to evaluate the best costing is not; at your fingertips, in your purview, realistic, and puts undue stress on internal resources with no expertise or systems to ensure the best results.
- At the very least, outsourcing provides you with flexibility with only pay for performance expectations.
- And…Bottom-line it’s the smart thing to do so you can:
- Grow more rapidly.
- Retain flexibility.
- Maintain company focus.
- Fulfill compliance requirements.
- Reduce internal employee stress.
- Benefit from external top talent, systems, analytics, and expertise.
For more information on Outsourcing Cost Reduction Services … Click here.
