Page 12 - Logistics News - September October 2022

P R O CUR E ME N T

Procurement as a service:

Why global demand for this

approach is increasing

By Leo Steyn, CEO of Dante Deo Consulting

In 2021, the global procurement as a service market was valued at approximately
US$6.3 billion. Given that the market has a projected compound annual growth

rate of 7 percent for the next 10 years, experts forecast that the market is likely to
reach a valuation of US$13.3 billion by the end of 2032.

he procurement as a service industry perfectly these goods do not directly affect the company’s end product
captures the immense spectrum of procurement or bottom line, items such as printers help employees do
Tservices delivered via a subscription or ‘as a their work. In this case, the key stakeholders would depend
service’ model. And these growth predictions show us on the company’s size. Large corporations are more likely
why we need to be paying attention. to have facilities managers that take care of these kinds of
purchases, whereas in a smaller business, office managers
With the impact of COVID-19 sending ripples through could assist with indirect procurement processes.
markets, supply chain practitioners worldwide are hard
at work streamlining procedures and processes to boost One thing both models have in common is people.
company-wide innovation, productivity and efficiency, These traditional procurement approaches rely heavily on
which, in turn, is driving the market to develop at breakneck people required to physically take care of copious amounts of
speed. paperwork, make and take phone calls for progress updates
and crisis management, and manually manage procurement
Considering that we are in a post-pandemic recovery functions. Although these activities are integral in getting
period, it does not come as a surprise that there is significant the job done as part of traditional procurement, they are
demand for digital-first, agile, collaborative services that will time-consuming and laborious and often take place in silos.
help businesses pre-emptively identify and mitigate hazards These repetitive tasks fail to generate substantial savings – or
and better manage cash flows. As a direct result of these profit. In a particularly volatile market, this is no longer good
unprecedented times, the procurement as a service model is enough. Companies can’t ignore the fact that traditional
set to transform the sourcing and procurement function. procurement fails to provide a strategic approach that makes
agility possible.
Procurement as a service: Evolution or revolution?
But before we go any further, it is worth reminding ourselves Traditional versus services procurement
that, traditionally, three types of procurement are common Procurement as a service takes a different approach: it
L O GI S T I CS NEWS and services procurement. Direct procurement refers to portion or all of a company’s procurement functions. This
combines technology, people and expertise to handle a
in the industry: direct procurement, indirect procurement
procurement delivery model puts procuring entities in the
purchasing raw goods, machinery and wholesale goods
directly from suppliers. Here, the key stakeholders are
driver’s seat, as a procurement expert will use the latest
suppliers and procurement officers. Indirect procurement
technology and marketplaces needed to effectively run any
involves purchasing goods like office stationery. Although

10 SEP T E MB E R/O CT O B E R 2022 procurement process. www .l o g ist i csn e w s .c o .z a