In today’s dynamic business environment, procurement teams are constantly seeking ways to optimise their procurement processes, increase capability and drive efficiency.
Why do procurement teams need additional support?
Some of the driving factors these teams may be facing include:
Increased workload
As organisations grow, expand and merge, procurement teams may struggle to handle workloads efficiently, leading to the need for additional resources.
Complex/one-off projects and initiatives
Procurement teams can often be involved in complex projects and initiatives that require specialised expertise. This is especially true with ‘once-in-a-career’ type projects when large-scale, business-critical supplier transitions are involved. In these cases, teams often need to bring in focused resource to ensure successful implementation with minimal business disruption.
Strategic focus Procurement teams are expected to play a strategic role in driving cost savings, identifying value-add opportunities and managing supplier relationships effectively. However, day-to-day operational tasks can sometimes limit a team’s capacity to focus on such strategic initiatives. Additional support can help to offload operational tasks and free up time to concentrate on higher-value activities, thereby maximising strategic impact.
Skills gaps
Procurement is a dynamic field that requires a broad range of skills and capabilities, including category knowledge across a wide range of business units. Sometimes, procurement teams may lack specific expertise or experience in certain areas, this is when external resource can plug the gap.
Temporary or cyclical demands
Procurement needs can vary over time, with peaks and troughs in demand. Organisations may encounter temporary spikes in procurement due to factors like mergers and acquisitions, seasonal demands, or new project implementations. Hiring additional resources allows procurement teams to meet these surges in demand without the need for long-term commitments or increased headcount.
Cost and efficiency optimisation Procurement teams are responsible for driving cost savings and operational efficiencies within an organisation. As a result, they may need additional support to conduct in-depth data analysis, implement new processes or technologies, or benchmark their performance against best practice. External support can provide fresh perspectives and expertise to optimise procurement operations and achieve cost reduction goals.
Consultancy vs. Interim Contractors
Two common approaches to fulfilling temporary procurement needs are hiring a consultancy or bringing in interim contractors. Whilst both options offer expertise and support, they each offer distinct advantages that can significantly impact procurement outcomes.
Let’s take a look at the different benefits of each model.
The benefits of consultancy
Fixed price commercials
Engaging a consultancy often involves a fixed price agreement tied to specific deliverables. This approach eliminates the risk of cost overrun, providing organisations with financial predictability and budget control.
Responsibility for project success and quality control Consultancies bear the responsibility for the success of the project. They provide an overarching Project Management Office (PMO) and implement robust quality control processes, ensuring that the project meets its objectives effectively.
A blended team with an output-based approach
Consultancies assemble teams with diverse expertise, tailored to the project’s specific deliverables. This approach ensures that optimal resources are selected, matching the project’s requirements. Additionally, consultancies offer on-demand burst capacity during periods of peak activity and eliminate client costs during periods of reduced or no activity. The project team structure provides resilience against sickness or absence, as the project is not reliant on a single resource.
Access to collective experience and knowledge
Consultancies possess a wealth of collective experience gathered from their diverse client engagements. This experience allows project teams to tap into best practices, industry insights, and a comprehensive knowledge library. It enables organisations to leverage proven methodologies and leverage the consultancy’s intellectual property.
Reduced legal fees and compliance
Engaging a consultancy can potentially lead to reduced legal fees, estimated at approximately 50%. Moreover, consultancies ensure compliance with relevant regulations, including IR35, reducing the risk of legal and regulatory complications.
Transition and contract management expertise
Consultancies offer transition and contract management services, leveraging their understanding of organisational culture, working practices, and subject matter. This familiarity facilitates smoother transitions, streamlines contract management processes, and ensures continuity.
The benefits of interim contractors
No budget surprises through the day rate model
Interim contractors operate on a day rate model, allowing for pre-planned project budgets. This model enables organisations to align costs with the project’s specific requirements and adjust accordingly.
Capable resources for specialised tasks
Interim contractors bring specialised skills and expertise to address specific procurement tasks. Their focused knowledge allows for targeted problem-solving and efficient execution of project deliverables.
Scalability and availability
Interim contractors offer flexibility in terms of scalability, allowing organisations to adjust resources based on project needs.
Direct management and control
Organisations have direct control over the hiring and management of interim contractors, enabling a hands-on approach to project execution.
Knowledge transfer Interim contractors can contribute to knowledge transfer by sharing their specialised knowledge with the internal team.
Possible disadvantages of the interim contractor model
Whilst interim contractors can fulfill your needs in the short term, there are a few additional considerations you should make before going down this route.
Finding a unicorn Securing contractors with relevant sector experience, especially in the public sector, can be challenging due to their scarcity in the current job market. The hiring process can be slow and the hiring authority can hold quite a portion of responsibility for project success. The skills needed for the tendering and negotiation phases are not the same as during transition and contract management phases; one interim procurement ‘unicorn’ if nearly impossible to find and if you do, they will be expensive. Then comes the problem of general ‘fit’ within the organisation, often hiring for skill can be at the detriment of hiring for culture and vice-versa. This challenge often plays out once the interim is in place, and if their contract is six months or more – you’re stuck with them (or face repeating the process and delaying the project.
Sharing the knowledge Interim contractors may not possess the same level of structured knowledge transfer mechanisms as consultancies. Their focus is primarily on executing the assigned tasks rather than facilitating broader knowledge dissemination within the organisation.
The management problem Interims are usually managed and directed by someone in your team. If you’ve sought additional resource in the first place, chances are you’re already stretched to the maximum, so managing and quality assuring an additional person can be more challenging.
Delays are expensive Every project ebbs and flows, and the interim model can feel inefficient during the normal slow periods. Similarly, if the project gets delayed and you have an interim sitting on your books it becomes hugely expensive – this is much easier to manage if it’s a consultancy.
Higher costs While interim contractors provide expertise for specific tasks, the total cost can be higher compared to a consultancy’s output-based proposal. This is due to factors such as day rates, additional costs related to IR35 compliance, and potential project delays leading to extended contractor engagements. In our experience, across the course of a 6-month project, interim costs can be around £60-£70k higher than consultancy support, dependent on day rate.
Project success
The interim model is not usually an output-targeted model, therefore interims aren’t held as accountable for project success as consultancy’s are, who are used to working to KPI (Key Performance Indicator) targets. Interims can also create a single point of failure due to sickness or unpaid leave and if projects get delayed as a result, then costs can overrun in terms of budget and time and at the extreme, fail.
Which route should we take?
Choosing between a consultancy and an interim contractor for procurement support very much depends on the specific needs, scope and duration of the project. The consultancy model offers a more comprehensive expertise, scalability, extensive networks and knowledge transfer capabilities, and output-focused solution, making them suitable for larger and long-term initiatives.
Interim contractors, on the other hand, are best suited when it’s a temporary fill for a permanent position, usually when someone has left or your need to increase your team size through a clearly defined day-to-day role. They provide specialised skills, flexibility, quick results and targeted problem solving for specific procurement tasks or short-term projects.
A key point for you to consider is where you want day-to-day management responsibility for the resource you are bringing in.
If you want an output model where you know you will achieve your desired deliverables for a fixed price, then the consultancy model is a much lower overhead in the long run.
The good news is that eXceeding can help you select the right route for your exact needs and provide either consultancy or interim contractors depending on what you conclude.
We may even be able to help you overcome budgetary restrictions through a supplier-funded model.
If you would like to discuss your needs with us, just get in touch or give us a call on 0330 088 1620.
We’ll offer you advice and guidance to ensure successful procurement projects that don’t break the bank.
Leigh works collaboratively with organisations across the public & private sectors. He helps define procurement challenges and navigate the options, then proposing solutions to align with desired outcomes. He manages a client portfolio with services delivered from outsourced managed services down to short-term project support.
