A 6-Step Approach to Better Services Procurement

Services procurement plays an essential role in modern business operations. However, unlike tangible goods, services are less concrete and require a different procurement strategy. This blog outlines six steps to build an effective procurement strategy with services procurement best practices that help organisations move from a standstill to creating value through effective services procurement.

Step 1: Understand the Problem - Data Analysis

The first step in improving services procurement is to understand your current services spend. Conducting a comprehensive spend analysis helps identify categories of services, suppliers, spending patterns, and areas of misclassification. This insight is crucial for identifying opportunities for consolidation, renegotiation, and cost reduction.

Step 2: Develop a Services Procurement Strategy

Once you have a clearer understanding of your services spend, develop a focused procurement strategy that aligns with your organisation’s goals. This strategy should aim to evolve the maturity of your services procurement by consolidating ownership and responsibilities, simplifying processes, setting out preferred supplier lists, managing long-tail spend, re-tendering long-term contracts, and improving governance. A well-defined services procurement strategy ensures consistency and maximises value.

Step 3: Leverage Procurement Technology & AI

Utilise procurement technology, such as procure-to-pay platforms, spend analysis tools, and supplier management systems to streamline procurement processes. These platforms are increasingly leveraging AI to improve specific areas of the sourcing workflow, such as automating services scope development, recommending best-fit suppliers, summarising RFx overviews, and optimising the supply chain. Procurement technology can automate routine tasks, provide real-time data, and improve decision-making, ultimately leading to cost savings.

Step 4: Negotiate Effectively

Negotiation is a critical skill in services procurement. To negotiate effectively, you need better visibility and data, including market rates, supplier capabilities, and your organisation’s requirements. Use this knowledge to negotiate better terms across the services supply chain, longer-term contracts, and volume discounts that can lead to significant cost reductions in procurement.

Step 5: Monitor and Measure Procurement Performance

Implement performance metrics and KPIs alongside contract deliverables for service supplier contracts to monitor the quality and efficiency of the services procured. Regularly review supplier performance to address any issues promptly and make ongoing improvements. Continuous monitoring ensures that your organisation receives the best value and meets its cost-saving goals. Best-in-class programmes leverage technology platforms to monitor each supplier’s performance at both individual and aggregated levels.

Step 6: Nurture Supplier Relationships

Building strong relationships with key suppliers leads to better service, innovation, and cost savings. Collaborate with suppliers to identify areas for improvement, share feedback, and develop mutually beneficial agreements. A partnership approach can enhance service delivery, reduce costs over time, and ensure effective services spend management.

Effective services procurement is essential for optimising costs and improving service delivery. By following the practical steps outlined in this blog, organisations can move from a standstill to maximising ROI from their services spend. Conducting a spend analysis, developing a procurement strategy, leveraging technology, and fostering supplier relationships are key actions that lead to successful optimising procurement of services.

Take the first steps towards transforming your procurement strategy today. Download our full guide A Practical Guide to Services Procurement: How to Go from Stand Still to Value Creation today.

Ready for a conversation now? Contact our team at Guidant Global to discover innovative solutions tailored to your organisation’s needs. Start optimising procurement of services and unlock unparalleled value for your business.