Consulting Procurement or Procurement Consulting?
Let’s play a game. Type Consulting Procurement in your browser and look at the results. What do you find? Procurement consulting companies. It’s true !
Consulting Procurement or Procurement Consulting?
quick Google search of “consulting procurement” returns a list of consulting companies that offer their services to help improve your company’s purchasing and/or sourcing capabilities. But is it the same thing as Consulting Procurement?
Let’s have a closer look.
When you need to buy consulting services, there are some mistakes that can make the process more difficult…
Consulting Procurement is most of the time internal.
It usually involves hiring someone within the company to buy or specify consulting services. The person in charge is often called a “consulting buyer” and is part of the indirect procurement team.
When a company doesn’t have the critical mass to have a dedicated “consulting buyer”, they can outsource their consulting spend to a sourcing company specialized in the management consulting category.
Consulting Procurement is about only one category: management consulting
Procurement consulting is about providing the services to buy goods and/or services, training on how to source or procure those items. It covers all direct and indirect categories. Some procurement consultants specialize in one or a group of categories to offer deeper expertise to their clients.
But Consulting Procurement is about one category: management consulting. It is an intellectual service, which is part of professional services and the indirect spend.
Both apply the same principles and methodologies
Consulting Procurement relies on the tools promoted by procurement consultants: strategic sourcing, category management, and other procurement best practices.
Consulting is an intangible service. It means that the consultants are selling their intelligence, their knowledge, and their expertise. Therefore it is difficult to describe your expectations and to measure the results. And that’s where procurement should focus when buying consulting services.
Both require the same skills but not the same expertise
Procurement consultants and consulting procurement experts are part of the same big family: the procurement nerds. Moreover, they both require similar skills: analytical thinking, negotiation skills; building relationships with all players (internal stakeholders) involved in sourcing/procurement activities; …
Consulting Procurement requires an in-depth understanding of the company strategy and the company challenges combined with a strong knowledge of the Consulting Category. You need more depth on a narrower segment.
Procurement Consulting requires to excel on the procurement front. It also requires you to be good at selling your services to external clients.
Both need to collaborate with the internal stakeholders
Procurement consultants are usually called when there is a problem. They also need to be able to work closely with the internal stakeholders to help them through change management, decision-making skills… They need to be good in project mode and can afford at times to be a bit blunt as they are 100% results-driven.
Likewise, consulting procurement professionals need to collaborate with their internal clients to source efficiently. The business lines bring their needs and business acumen, while procurement brings their tools and processes to facilitate and guide the purchase. They need to develop deeper relationships and to manage carefully all relationships as they plan to evolve within the company.
Both have to build trust with the top management
A consulting project that does not get the buy-in of the top management is doomed to fail. It is change management 101. You’d rather have half-baked recommendations fully accepted rather than perfect advice rejected by everyone.
Consulting Procurement groups need to build trust and credibility to be involved in the purchase of management consulting projects. Very often, they are only called at the very end to negotiate the price. Because the business lines don’t see the value they can bring to the process.
Consulting Procurement is a tiny niche
Operations consulting represents roughly 30% of the consulting market and procurement consulting is an evergreen need. All companies across industries need to optimize their tail spend, reduce their costs, or improve their sourcing capability.
While consulting only represents 2 to 5% of the overall spend of a company on average. However, the impact on the business is often way bigger, sometimes more than 10 times the cost of the project.
Procurement Consultants rarely cover the consulting category
Some procurement consulting leaders are proposing optimization services for the consulting category as part of a broader offering. But most of the time, they are not fully equipped to support their clients and they have a conflict of interest. For instance, as a tier 1 consulting firm, would you recommend challenging the incumbents and including tier 2 or tier 3 suppliers in the PSL? To address this gap. there is a handful of niche boutiques specialized in the consulting category, Consulting Quest being one of them.
Consulting Procurement teams often do not have the critical mass to be 100% focused on Consulting so they are often addressing other indirect or professional services activities.
If you’re reading this blog post, then you know that consulting procurement and procurement consulting are not the same. Consulting Procurement is most of the time internal and applies to the management consulting category only. Both apply the same principles and methodologies but they require different skill sets. Consulting Procurement professionals and Procurement consultants both need to collaborate with stakeholders and build trust with top management by leveraging their connections in order to be successful. Finally, Consulting Procurement is a tiny niche that procurement consultants rarely cover.
You may have guessed our suggestion for those who want help understanding these two concepts better already – call us! We are always game for a chat.
Consulting sourcing tips
Implementing demand management for consulting services means building a decision-making process in order to filter the projects you want to launch based on their impact on your business and keep your expenses under control. It gives you a great opportunity to boost the transformation of your organization. Still, it requires some degree of centralization and transparency. So what’s the key to a successful demand management system?
Like for any other category, Supplier Relationship Management (SRM) is a Huge Topic for Consulting Services. The way Procurement manages Consulting Providers should fit in the overall SRM practices for the company.
Managing a consulting project is, first and foremost, about managing a project. You will need to manage three aspects to increase the likelihood of success: manage the stakeholders, manage the project and manage the change.
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