A Procurement Service Provider(PSP) is a third party organization or consultant which is used to supplement internal procurement departments. PSPs have their own staffing which assists in a variety of tasks for their clients. These tasks include: strategic planning, implementing best practices, supplier rationalization, supplier collaboration, strategic sourcing and negotiation.
Mostly, it is expensive and difficult for organizations to have domain expertise in every category of spend. Using a PSP avoids the burdens of procurement infrastructure for non-strategic categories. It can provide a rapid analysis of an organization’s spend and implement changes, negotiate with suppliers, and use proven industry best practices. A good PSP will become an extension of the organization’s existing procurement resources, in a non-intrusive manner.
The purpose of this breakdown of the roles and responsibilities of a PSP is to give you a better insight as to what exactly it does. Why do you need a PSP and how selecting an efficient PSP will dramatically improve your business and help save cost.
At Redeure, we offer services that will help you procure quality products and services with minimal cost. With the opening up of the global economy, procuring goods from a low-cost country can be hugely beneficial.
Procuring goods and services from suppliers based in foreign countries is a daunting task. We know that selecting a proficient procurement service provider can be difficult. Here are 10 key traits that a good PSP must possess. Navigating through the plethora of procurement firms and managers, a good PSP will help you balance quality and cost.
10 Key Responsibilities of a Procurement Service Provider
1. Supplier Evaluation
We evaluate the supplier before our clients sign a contract with a particular supplier to see if it’s worth collaborating with them. We look at the price and quality of the provided items and how fast delivery can be completed.
2. Interviewing Vendor
Our team converses face-to-face with vendors to learn more about their products and services to make sure that our evaluation was correct and comprehensive. This is essential as it also allows us to understand their business ethics and principles. This may seem unimportant at first but it is foundational to building a good supplier relationship.
3. Visiting Supplier Plants and Distribution Centers
Visiting the supplier’s plant and distribution center can tell you a lot about a particular supplier. We often find ourselves asking questions like – Is the supplier meeting the quality standards? Is it working efficiently to meet your company’s demands? Are the manufacturing storing and shipping conditions appropriate? These along with other questions are answered during such visits.
4. Attending Trade Shows Conferences and Meetings
A Procurement service provider or manager is always in a constant learning process. It’s mandatory to be up to date about the latest products, suppliers, conditions of the market and emerging trends. Hence, a good PSP will be well informed and actively participate in such trade meetings.
5. Analysis of Price Proposals and the Financial Reports of the Company
Your company will always want to obtain the best price for each acquisition. So we must analyze the price proposals of suppliers and the financial reports of the company before negotiating the best price.
Negotiating contract terms and conditions is another important aspect of procurement. Your PSP needs to be a great negotiator and close deals on behalf of the company. Procurement involves competitive bidding and providing the best value to the clients. This helps in improving the bottom line.
7. Collaboration With Suppliers
A good supplier relationship is required for agreeing upon policies. Collaboration is required to agree upon convenient policies. This determines the details concerning the shipment of products and other details that helps in keeping a steady workflow.
8. Collaboration With Staff Members
Every business needs to coordinate smoothly for meeting the standards. The staff members should be trained concerning the acceptable quality of the received goods. They need to be able to determine defective or unacceptable goods and decide what actions to take in such cases. Therefore, the entire team needs to coordinate with one another to achieve the desired outcome.
9. Monitoring and Evaluation of Contracts
Once a contract is signed, it’s the responsibility of the PSP to make sure both parties adhere to the contract agreements. Alterations to the existing agreement if and when required needs to be clarified and communicated.
10. Maintaining and Reviewing Records
A Procurement service provider or a PSP is also tasked with reviewing the purchased inventory. An up-to-date inventory along with detailed information about a product’s price performance and delivery is important.
At times, it’s better to let an outsourcing agency handle the pressure and exercise their expertise while you focus on your company’s main goals. Take these key traits and responsibilities under consideration as it will help you find and evaluate what best suits your procurement needs. To a great extent, the roles and responsibilities of the purchasing and procurement manager are similar. However, there are subtle differences between the two terms. Learn more about – purchasing V/s procurement.