Outsourcing could be in your future

When you think of communicating on social media, the likes of Twitter, Facebook or Instagram undoubtedly come to mind.  When you think of boosting your mobile data speed, it’s Sprint, Verizon or AT&T that populate your thoughts. But what or who do you envision when you mull saving money on your business’ low dollar spend?

Chances are nothing and no one immediately come to mind.

Lower dollar spend (also known as tail end spend) is a portion of an enterprise’s indirect spend, i.e. goods that support the business but that do not become part of produced goods or services rendered. Too often, lower dollar spend is paid little attention. Organizations will instead scramble to ensure focus on core competencies – but neglecting lower dollar spend can leave potential savings on the table.

Let’s use an example. Toyota, one of the top manufacturers of quality cars, is not likely to allow an outside organization to make sourcing decisions on a Camry’s drive train or engine block. Outsourcing any business process requires careful consideration, stakeholder agreement and a solid rationale. And so core business processes – that is, the processes that truly differentiate your business from your competitor – typically remain in house, where they belong.

But what about the costly, cumbersome processes that are secondary? For Toyota, these may include the purchase of office supplies, or planning of employee travel. For any organization, these secondary processes are ripe for outsourcing: Human resources, accounts payable and procurement are just a few that are best handled by a third-party expert.

At SDI, we’re experts in how well-managed procurement spend contributes to corporate growth and profitability.

In fact, as Procurement and Supply summed up in a recent article, “At a time when many companies are facing tough times, procurement is becoming recognised as an essential component of corporate strategy for leading organisations. It is well understood by CEOs and CFOs that buying more efficiently can bring big cash savings and more revenue through improved quality of goods and services as well as more reliable supply chains.”

Think of outsourcing your procurement process as experiencing a new car. Keeping the process in house requires capital expenditure whenever upgrading procurement systems and techniques. But by leveraging the expertise of a savvy procurement organization, you take advantage of the best in the business. For much lower cost, you get to quickly ride in that new car without actually having to buy it.

SDI achieves benefits for our partners by acting as a single point of contact for all lower end spend. Not only does our program increase savings through lower cost commodities and diminished administrative costs, but also by consolidating or eliminating associated administrative tasks. This frees up employees to focus on higher value responsibilities.

Your company can experience newer, advanced technologies and techniques by shifting the efficient management of non-preferred, small supplier spend to SDI. Because in aggregate, all that incremental spend unquestionably adds up.