Procurement benchmarking can help to control costs, streamline processes and improve service quality, while minimising – or hopefully avoiding – disputes. It can also help to reduce the price of long-term ongoing outsourcing deals and ensure that contracts remain cost-effective and efficient in the fast-paced technological world in which we live.
The need to run a benchmarking procurement process may stem from a number of challenges you are experiencing.
For example, you may be experiencing pressure from senior stakeholders to renegotiate contracts, reduce costs or validate that you are already receiving value for money.
Alternatively, your supplier contract could be coming up for renewal and, whilst you have a good relationship with your incumbent provider, you’d like to be sure that your costs and operations are in line with your competitors.
Or maybe a new supplier, delivery method or technology has entered the market and you’d like to understand whether this offers new innovations or efficiencies in the way in which the service could be delivered.
Whatever the challenge, benchmarking is an ideal solution and we urge all organisations entering into a long-term contract to ensure that they insist on a procurement benchmarking clause.
Our procurement benchmarking services can be implemented as part of a strategic transformation project, or as part of a targeted supplier or contract renegotiation, to help benchmark contracts and get the best value from your products or services.
Before eXceeding, Steve spent 16 years working on the supplier-side of outsourcing. During Steve’s 24 years’ experience, he has worked on global and UK outsourcing deals, ensuring the creation of win-win partnerships.
Over time, the provider landscape matures: new providers emerge, more efficient processes are developed, and innovation and technology advancements drive down ongoing costs.
So how do you ensure that you have the best possible solution?
It’s common for market comparisons to focus purely on pricing, but price is only one aspect of the overall agreement. To ensure that you are benefiting from the best possible solution, you should consider: pricing, total cost of ownership, SLAs (service level agreements), KPIs (key performance indicators), risk and service management, and contractual agreements.
Procurement benchmarking metrics allow you to assess supplier performance and market value without having to conduct a lengthy, and sometimes costly, tender process. It is an opportunity to reach out to our network to gain feedback and to speak to supplier competitors to understand their pricing models, SLAs and overall service offer.
Benchmarking provides you with the opportunity to look for new sources of value, new capabilities and develop a case for change.
There are many reasons you may decide to run a benchmarking procurement process:
But where do you start?
A procurement benchmarking exercise is complex. You need up-to-date market knowledge, commercial data and an expert understanding of the specific category being benchmarked in order to conduct a thorough review. There is a need to fully evaluate financial or operational best practice, in order to measure supplier performance against competitors.
A benchmarking consultant can work with you on a review of a single contract or to benchmark multiple suppliers, depending on your individual needs. Maybe you are considering running a tender but are concerned about the time and resource needed to run the process. Procurement benchmarking metrics can give you the reassurance you need that your incumbent supplier is the best available option, without the time and cost investment of a tender process.
Our procurement experts have years of combined experience of working in a variety of private and public sector organisations. We know what best practice should look like and our extensive procurement benchmarking services can provide you with realistic, achievable action plans to optimise your performance.
So how do we do this?
Our specialists take time to really understand your organisation and your strategic plans. We are not afraid to ask your senior stakeholders the challenging questions in order to fully realise the benefits of your benchmarking exercise. We use this first stage to gain a full understanding of the current operating model, resources and capabilities, culture, cycle times, supplier base, costs and current returns on investment.
We then take a look at what good looks like from a market, category and best practice perspective. We provide a market assessment by closely analysing new suppliers, potential tools or technologies and reviewing competitor performance to then use as a comparison for your own organisation.
Opportunities and risks
Assimilating the gathered data, we then look at where there are opportunities for you to evolve your practice, create innovation, reduce costs, realise value from your suppliers or enhance the capabilities of your procurement function. We also assess where you may currently be exposed to risk in your supply chain and mitigate that for the future.
We provide you with a comprehensive report that is based on the reality of your current state. We suggest areas for immediate improvement, identify opportunities and develop a bespoke action plan that can be practically applied in your organisation to get you to your desired future state.
As part of the procurement benchmarking recommendations, you have the option to engage with us for ongoing support. We can help to provide short or long-term resources for potential skills or capacity gaps that may have been identified, we can assist with renegotiating existing contracts or run a new competitive tender, we can help to manage your supplier relationships or transition to a more strategic procurement function.
Most importantly, by working with us, you can be confident that the advice and guidance we suggest will be achievable and more importantly, successful.
This is the team that can make your benchmarking process run without a hitch.