Outsourcing Compliance Tracking and Supplier Performance Management in Procurement

As procurement departments strive to become more agile, outsourcing is becoming an important strategy as well. Business process outsourcing (BPO) has proven to be essential for procurement teams that are making major changes to their processes but can’t risk any interruptions.

Some procurement-based BPO revolves around day-to-day procurement or back-office tasks. However, many procurement teams outsource tasks like securing and managing vendors to external firms.

Here, we’ll explore which processes procurement leaders are outsourcing and why BPO is becoming such an important tool for the function.

Most Procurement Leaders Already Use BPO

Once conceived as a way for companies to outsource repetitive processes, BPO has become strategically important to many different types of organizations. That’s because BPO enables them to access experts immediately, reduce strain on their internal staff, and focus more intently on strategic initiatives.

Indeed, leveraging BPO is one of the ways procurement has risen from a compulsory business function to a department of strategic value.

According to a recent ProcureCon study of CPOs, 78%  of the respondents said they rely on a partner for BPO.

However, only 41% of all the respondents said they both rely on a partner for BPO and are satisfied with their relationship. Over one-third of the respondents (37%) were not currently satisfied with their BPO partnership.

This could be due to several factors. For example, the procurement department itself could have changing needs that are no longer relevant to their current relationship. Of course, they could simply be unsatisfied with the speed, accuracy, or reliability of their BPO partners’ services.

Supplier Performance Management and Compliance Tracking Are Key BPO Services

Nonetheless, many procurement teams require BPO services.

Specifically, 41% said in the CPO study that managed BPO compliance tracking would make their lives easier. In each case, over one-third of the respondents (37%) said supplier performance management and eSourcing would make their lives easier. Another 36% said the same about sourcing support.

Supplier Relationship Management (SRM) goes beyond BPO to encompass everything necessary for vendors to achieve excellence through the suppliers’ BPO partner.

SRM BPO services include developing supplier scorecards, identifying benchmarks and industry best practices, conducting supplier negotiations, and providing procurement training.

Procurement departments with ongoing BPO partnerships could conduct an audit of their partner’s activities to review whether they still provide significant value to the business. Procurement leaders have demonstrated here that they value BPO services, but they may need to partner with BPO organizations that can align with their long-term strategies and transformation goals.

Compliance process outsourcing is equally important because it enables buyers to fulfill their legal responsibilities and ensure their suppliers are doing so as well. BPO firms help teams develop SOWs that comply with specific legislation like the U.S. Federal Acquisition Regulation (FAR). BPO firms also help buyers achieve B2B compliance goals via B2B-specific BPO tasks like performing B2B risk assessments.

BPO firms typically offer B2B-specific BPO solutions, including vendor performance management, which can help buyers strengthen B2B relationships. BPO firms can also drive B2B excellence for their customers by enabling them to manage the entire purchasing cycle, from BPO to B2B contracting.

Discover More Procurement Trends in the Latest Report

Procurement teams are increasingly recognizing the benefits of outsourcing key parts of their procurement process. As buyers continue to demand more agility, business process outsourcing (BPO) is becoming an essential tool for procurement departments. Many companies outsource compliance tracking and supplier performance management because doing so provides them with cost savings and improved capabilities in these areas.

Download the 2022 ProcureCon CPO study to learn how BPO can help you achieve your goals as well.