XChanging survey shows sourcing and procurement failings

A major survey from Xchanging has shown that the sourcing and procurement industry (S&P) industry needs to mature in order to meet companies’ demands.

Xchanging Procurement Services, the business process, procurement and technology services provider, has released new findings from a major survey of 450 sourcing and procurement decision-makers from across European businesses.

It found that 45 percent of those currently outsourcing say providers do not always match their S&P requirements and 93 percent of those who do not outsource their S&P services would not consider it.

The survey, found that less than a quarter of companies surveyed currently outsource parts of their S&P activities (23 percent). Of those companies that do use outsourcing, 45 percent have found that service providers are unable to match their specific requirements, and 68 percent would still prefer in-house initiatives to improve S&P within their businesses.

Nick Ford (pictured, right), Business Development and Market Director at Xchanging Procurement Services, said: “Compared with other markets around the world, the procurement outsourcing industry in Europe is still at a relatively undeveloped and unexplored stage. In the US, for example, companies are increasingly using external service providers to deliver expertise across a diverse range of suppliers and products and master challenges such as balancing structured processes and technology.

“In Europe the take up has been much slower, and where no outsourcing experience exists, scepticism and reservations are high. This means that many European businesses are missing out on advantages such as cost reduction, spend control and the streamlining of operations that are enjoyed by their American counterparts, and this can affect their competitiveness.”

As for the 93 percent not currently considering doing outsourcing parts of their S&P and procurement activities:

• 92 percent would prefer to opt for in-house initiatives to improve their S&P service capability

• 50 percent see a loss of control and know-how within their companies as a high or medium barrier to outsourcing

• 50 percent think that personnel and staffing issues make outsourcing economically inefficient

• 47 percent believe that dispersed organisational structure and multiple locations and systems makes outsourcing too complex, and the same number also cite service providers being unable to match specific requirements as a barrier

Conversely, satisfaction among companies that are currently outsourcing their S&P function is generally high, with 90 percent saying they are going to increase or maintain outsourcing activities:

• A majority (51 percent) intend to increase the level of outsourced services they use

• 39 percent intend to maintain the current level of outsourced services that they use

• Only 10 percent intend to decrease the level of outsourced services they use

Nick Ford added: “The high level of satisfaction among those who are already using external providers suggests that the European market should be stronger. However, when nearly half of all companies say that service providers are unable to match their requirements then it is definitely a call to action for the industry to ensure we are working with our clients in the pre-contract stage to assess their needs and offer them more bespoke solutions tailored to their business.“