How to Form Successful Outsourcing Relationships

Even as the UK appears to be coming out of the recession, there’s no doubt that UK organisations will continue to look to outsource vital services over the coming months. The promise of increased efficiency, lower costs and working with subject matter experts mean that, for some businesses that want to streamline their operations, outsourcing seems to be the best solution. The question is, how can you ensure a fulfilling, successful outsourcing relationship?

One of the main reasons for outsourcing failure is that very few businesses seem to grasp that fact that all relationships need careful attention. Many organisations think that people who excel at managing internally will also be able to manage complex outsourcing contracts with external parties.  In reality, outsourcing success will be much more achievable with a proper training programme.

There are a number of benefits that training can provide when it comes to managing an outsourcing engagement, particularly in helping organisations to identify the right service partner for their business.

One key failure in some outsourcing deals is the one of over promising and under delivering. By training decision makers to look for a supplier that is a good fit, both in terms of culture and relevant expertise, organisations will be able to encourage a more collaborative and successful relationship. This will allow them to discuss problems openly and identify practical solutions before the issue gets out of hand.

Another alternative solution would be to hire a dedicated costs management specialist, such as The Procurement Group to assist in the sourcing and negotiation of external service contracts.

How Small Businesses Could Be Wasting Money

In this economy, every business is cutting costs wherever they can in an effort to make ends meet and increase profits.  Small businesses, in particular, have to work even harder to avoid wasteful spending because they have fewer resources than big corporations.

Here is a list of some of the ways that small businesses may be wasting money:

1.  Not making energy efficient choices:

The most common way small businesses lose money is through using appliances and fixtures that are not energy efficient.  For example, switching to fluorescent light bulbs could save up to £10 per kilowatt hour and turning off desktop computers in the evening could save £20 per computer per annum.

2.  Unnecessary food costs:

Constant lunching and trips to the local coffee shop could have an impact on your budget, especially if you have a tendancy to treat the rest of the office.

3.  Not chasing debts:

Many small businesses don’t have their own accounts department to chase unpaid debts and keep track of their own due dates.  This can cause an impact on cashflow and potentially result in unnecessary bank fees.

4.  Unwise Advertising & Marketing Decisions:

Online advertising can be one of the fastest ways of reaching a large audience of prospects.  However, using some online advertising methods, such as pay per click adverts, can be a costly waste of money if used improperly.

When deciding on your advertising methods, it is important to remember to take account of the return on investment to make sure it is worth the money spent and is bringing in enough sales.

5.  Losing track of the small costs:

20p or 50p here and there may seem insignificant, but they can add up in the long run.  For a small business, it is crucial to stay on top of where the money is going and the everyday expenses that can cause problems with your cashflow.  For example, if you overpay on each envelope by 10p and send approximately 30 letters a week, this would add up to an annual loss of £156.  In this scenario, it may be more sensible to purchase a franking machine to make sure there are no inaccuracies.

6.  Settling for the price tag:

It is a misconception that discounts are only for big companies who buy in bulk.  Many companies offer surprising discounts for small businesses in exchange for repeat business.  You may also be able to negotiate additional discounts for paying your bills promptly.  If you want help liasing with your suppliers to see what you can save today, the Procurement Group can help you.

What is Procurement and How Can It Help?

Procurement is defined as “the act of obtaining or buying goods and services”.  But in a commercial context, it usually involves a business bringing in a consultant to review all of their outgoings and identify where potential savings can be made.

The procurement specialist will use the combined purchasing power of their clients, together with their network of suppliers, to leverage increased savings for the business.  The Procurement Group, for example, guarantee to make substantial cost reductions within 4 weeks and our average saving is 25%.

But it’s not all about the money.  Procurement specialists will also usually do the following:

  • Managing supplier relationships;
  • Handling paperwork;
  • Watch for new opportunities;
  • Invoice validation;
  • Arranging consolidated invoicing;
  • Resolving historic billing issues;
  • Match (or improve) service levels;
  • Producing accrual schedules;
  • Serving terminations on suppliers;
  • And much, much more.

All of these jobs help to free up key employees to enable them to focus on the core business.

We understand that for many businesses, service levels are as important (if not more so) than the cost, so we work with you to ascertain any suppliers that you wish to retain and always try to improve (or at least match) the service levels of any existing contracts.  We provide a range of quotes for every area so that you can decide what best suits your business.

How Are Procurement Specialists Paid?

At The Procurement Group, we are so confident that we can save your business money, that we won’t charge you a penny if we conclude that savings can’t be made.   If savings are made, you pay us a percentage of the savings that we make for you and because we invoice quarterly in arrears, you will quickly see a positive impact on your profit and loss and cashflow.

The Benefits of a Savings Audit Before a Merger

If your firm is considering a merger, then this is the perfect time to bring in procurement specialists to carry out a savings audit to review both firms’ outgoings and assess where reductions can be made.  The procurement function can be relatively pain-free and usually costs nothing unless savings are made.  Procurement specialists can start generating real savings almost immediately.

Mergers have always been the more practical trigger for pursuing much needed procurement synergy, and as most business owners soon realise, pooling buying power and concentrating volumes are some of the most effective strategies in use by advanced purchasers.

Certain parts of the company may have to undergo thorough complex restructuring, but strategies such as harmonising company-wide specifications are pretty basic and require little effort to implement. These strategies result in establishment of long-standing value for the business.

Some of the common sought after synergies in mergers include purchase process consolidation and scale buys, which can sometimes contribute half of all targeted M&A results. Not all companies manage to achieve the goals, and even when they do, a lot of the time, they have to settle for rudimentary improvements as consolation for the disappointing deal.

In order to clearly realise the synergies, start with early procurement and keep in mind that inadequate planning adds up to disappointing results. Procurement organizations like The Procurement Group can control up to 90% of overall expenditures, so in order to experience actual savings, it is advisable to have a savings audit as early as possible.  In addition, they can also review billing and administrative procedures to ensure that they are as stream-lined as they can be.

By managing supplier relationships, handling paperwork and watching for new opportunities, procurement specialists can free up your staff to focus on creating a smooth and trouble-free merger.

How to Save Money on Business Travel

Travelling is an intrinsic part of most businesses. Whether you run an online marketing firm or sell electronic goods, a major part of your business will involve meeting clients and travelling on several occasions. Although travelling cannot be avoided when you own a business, there are several simple ways in which costs can be controlled to a large extent.

In the current economic scenario, cost savings is a priority for every business. Entrepreneurs often complain about rising travel expenses that get out-of-control all the time. By properly planning a trip well in advance, it is easier to avoid last minute expenditures.

Here are some simple tips to save money during business trips.

Take the Train

Travelling by train was not a great idea for most business owners until recently. After the economic slowdown and severe credit crunch when companies started looking at low-cost travelling options, many realised how economic it is to take the train. To make business trips more comfortable, many operators provide facilities such as WiFi and power sockets. Booking tickets in advance is another great way to plan a hassle free business trip.

Spend Less on Food

After flight tickets, meals induce large spending for business travellers. A smart way to spend less on food is by staying at hotels that serve a large breakfast. A wholesome and filling breakfast is important to get going for the rest of the day. It is also a good idea to carry cereals and dry fruits that can be taken as night-time snacks. Many frequent travellers also stay at hotels where they can cook their own food. While the idea of cooking during a trip may not amuse many, it is a great way to save money and also beat stress.

Don’t choose luxury restaurants for business meetings and book lunch appointments rather than dinner.  The purpose of a business meeting is presumably to make a deal. You should be thinking not of the price of the meal but the value of the deal.

Find a Good Travel Agent

Travel agents might sound a bit old-fashioned, but they are still the best deal providers. They have contacts with hotels and train operators to provide good options for business travellers. Moreover, they can help plan a busy trip and save you last-minute confusions that often lead to unnecessary expenditures.

Get a Discount

It is a great idea to make the most of deals that are extended to frequent travellers by hotels, tour operators and restaurants. If you are travelling to the same city quite frequently, look for deals offered by local restaurants that can give you good discounts. These discounts will help you save money and enjoy your trip.

Select off-site parking and stay away from valet services. It’s better to hit the road a bit earlier to use an off-site facility than spend too much on valet services, especially if you don’t have much luggage.  If renting a car, don’t use add-on options such as GPS systems and don’t pay for petrol in advance. It’s cheaper to invest in corporate GPS systems if your travellers really need them.

With these simple tips, saving money while you are on your next business trip will be easy!



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