Procurement outsourcing is an innovative solution for today's corporate market looking to reduce costs and improve efficiency. Many companies have realised that the procurement initiatives of the early 2000s did not deliver the level of cost competitiveness promised, so they have begun to look at outsourcing to deliver on those promises.

Over the last 10-15 years, companies have struggled with new technology adoptions, cycles of centralisation and decentralisation, employee empowerment, and a myriad of other tools, strategies and analyses, attempting to lower the costs associated with the purchase of these non-core materials and services. Through indirect procurement outsourcing, the corporate world can finally achieve substantial cost reductions while turning these low performing assets into a competitive advantage.

Indirect spending is a large portion of the overall corporate buy, and the ability to improve the bottom line through cost reduction dwarfs the impact on sales revenue that is needed to achieve the same result. Indirect spend can comprise between 30 and 60 percent of the average company's spending.

For companies in the professional and financial services industries, indirect spend can comprise virtually all the total spend. Therefore, procurement professionals are constantly challenged to improve the bottom line because of their ability to impact the profit margin versus what is required to achieve the same effect focusing purely on revenue growth.

Consider a company with a 10% profit margin before taxes; every £10 in revenue translates into £1 of profit. It now wants to increase profit contribution by £10. It can either cut costs by £10 or increase revenue by £100. This simple example illustrates why procurement professionals receive the brunt of meeting short-term financial targets rather than relying on the ability to increase revenue.

For shrewd buyers of procurement services, the benefits are clear: lower spending on indirect goods and services and improve procurement effectiveness. Fownd Supply Management can offer lower prices to our clients through aggregated spending, and through improved access to an assortment of suppliers.

Fownd Supply Management can also improve procurement effectiveness through access to best-in-class practices and technologies and to deep category expertise across the total spend. In addition Fownd Supply Management can lower procurement operating costs by leveraging our employees across clients, and have access to the latest tools and methods allowing us to streamline the work flow to use less labour, and deliver a better result.