Overview of Procurement Outsourcing

After the outbreak of the global economic crisis in 2008, Chinese small and medium-sized enterprises (SMEs) have become more aware of their own risk control. Especially most of the enterprises on the coast have outsourced their procurement business to professional procurement service providers, which can help them save fixed investment, reduce procurement costs, and lower operating costs. However, in the western part of the mainland, some business owners are bound by traditional thinking, the development of procurement outsourcing services in the west is relatively difficult.

Procurement outsourcing is conducive to enterprises to focus more on their core business. Specialized things are left to the professionals. Procurement outsourcing for small and medium-sized enterprises can reduce procurement costs, reduce personnel input, reduce fixed investment, reduce procurement risk and improve procurement efficiency. For SMEs, procurement outsourcing is the best way to reduce costs.

Currently, many enterprises in China are constantly exploring with a view to finding a new procurement outsourcing model, such as Sichuan Anrico will be outsourcing procurement and joint purchasing combined, has come out of a completely new road. These enterprises not only need to outsourcing mode of continuous development, exploration, innovation, but also continue to guide small and medium-sized enterprises, but also to educate small and medium-sized enterprises to accept the abandonment of the old procurement model.

Procurement outsourcing is characterized by: a parallel mode of distribution of operations; in the organizational structure, the implementation of procurement outsourcing enterprises, due to the streamlining of procurement operations and greater flexibility; information technology as the basis for the realization of external resource integration; procurement outsourcing can enable enterprises to focus on the development of core competencies.

The term "outsourcing" was first used in a 1990 Harvard Business Review article by Gary Hamel and Prahaoad entitled "The Core Competence of the Corporation". "Outsourcing" (outsourcing) the direct translation of the English word is "seeking external resources", and later translated as exogenization, resource outsourcing, resource outsourcing, resource outsourcing, etc., is "Out Source Using It is the abbreviation of "Out Source Using". The general definition of outsourcing in the theoretical world is: "In the case of limited internal resources of an enterprise, in order to obtain a greater competitive advantage, it only retains its most competitive core resources, and integrates the other resources with the help of the best external specialized resources to reduce costs, improve performance, enhance the core competitiveness of the enterprise and enhance the enterprise's ability to adapt to the environment. management mode".　　　　After the 1980s, the theoretical study of "outsourcing" focuses on the following two aspects: (1) Outsourcing theory based on transaction costs [1]: Cheon, Grover, Teng (1995) studied information technology outsourcing, and believed that only when the sum of the outsourcing transaction costs, management costs, and supplier supply costs is less than its own production costs. the sum of which is less than one's own production costs; Vinning and Globerman (1999) argued that minimizing the sum of production costs, negotiation costs, and opportunistic costs is the basis for outsourcing decisions; in addition, Klaas, MeClendon, and Gainey (1999) studied human resource outsourcing and argued that the total transaction costs come from price, costs of maintaining contractual and employee relationships, monitoring costs, and opportunistic costs, different governance structures lead to different costs, and the decision is based on minimizing total transaction costs. (2) Outsourcing theory based on core competitiveness [2]: Core competitiveness theory is a theory of enterprise development strategy proposed by American scholar Prahalad and British scholar Hamel in 1990. Core competitiveness theory that: enterprises are a collection of resources and capabilities, the heterogeneity of resources between enterprises or the special capabilities owned by enterprises is the key factor in determining the competitive advantage and business performance of enterprises, that is, the core competitiveness, which is a series of technological systems, organizational and management systems organically fused into an intangible, dynamic capability resources. From this theory, enterprise processes can be divided into strategic processes and non-strategic processes [3]. Strategic processes are processes that play a key role in the selection and implementation of corporate strategy, and the core competencies and core business of the enterprise depend on strategic processes. Non-strategic processes are the processes that support and guarantee the strategic processes, which contain the auxiliary and additional business of the enterprise. Strategic processes are the source of a company's sustainable competitive advantage in the marketplace and must be internalized. Non-strategic processes should be analyzed in terms of the closeness of their relationship with strategic processes; those with a low degree of closeness can be outsourced; those with a high degree of closeness should be internalized or arranged through some kind of close partnership.　　　　The theory of business outsourcing has four structural elements: outsourcing subject, outsourcing goal, outsourcing partner and outsourcing design. The main body of resource outsourcing is the economic institution that decides whether to outsource or not, the resource outsourcing goal is the result of the outsourcing process, the resource outsourcing partners are all the suppliers that may accomplish the outsourcing goal, and the outsourcing design is the planning of the outsourcing method. The management goal of the outsourcing relationship is to make the behavior of outsourcing partners and the outsourcing body's goal to maintain consistency.