What You Need to Know about Services Procurement and Total Talent Solutions

Procurement, sourcing, statement of work, purchasing – these are all terms you've probably heard mentioned together at some point. You may have also heard some of these words used interchangeably. But are they actually interchangeable?

Let's break down exactly what procurement is and the benefits it offers within a total talent solution.

What Is Procurement?

Procurement is the process of acquiring goods and services for an organization. This process involves several steps, including identifying suppliers, negotiating terms, and purchasing goods or services. Another key responsibility of procurement is recording and documenting each step in the process.

There are several different types of procurement:

• Direct Procurement: Goods or services required to produce an end product. These include machinery, resale items, and raw materials.
• Indirect Procurement: Non-production-related goods and services, such as utilities and marketing services.
• Goods Procurement: The acquisition of physical goods, which can fall under either direct or indirect procurement.
• Services Procurement: The acquisition of services provided by individuals or organizations, such as independent contractors, contingent labor, law firms, and security personnel.

The type of procurement we'll focus on in relation to total talent solutions is services procurement, which includes staffing services.

Procurement Versus Sourcing, Statement of Work, and Purchasing

If services procurement involves acquiring people-based services, why are the terms sourcing, statement of work, and purchasing often used in conjunction with it? Let's define how these terms relate to procurement.

Sourcing: Sourcing is an early part of the overall procurement process and includes activities such as identifying potential suppliers, reviewing and negotiating terms, and selecting vendors that best fit the organization's needs.

Purchasing: Purchasing is another part of the procurement process that typically follows sourcing. It involves activities such as finalizing purchase terms, creating purchase orders, and acquiring goods or services.

Statement of Work: A Statement of Work (SOW) is a document that defines a project's objectives, deliverables, scope, and the specific tasks and responsibilities of the contractor or service provider. Many companies that offer services procurement management also provide SOW management to help oversee these engagements.

The 7 Stages of Procurement

The number of stages in your procurement process will depend on the size and needs of your organization, but there are seven key steps commonly involved in the procurement process.

1. Identify the Services Needed for Your Organization: Determine your organization's requirements and the services necessary to meet business objectives.
2. Start the Sourcing Process and Consider Potential Suppliers: Identify and evaluate suppliers that can meet your organization's needs.
3. Negotiate Contract Terms: Establish pricing, service expectations, responsibilities, and other contractual requirements.
4. Finalize the Contract: Complete the agreement and confirm the terms of the engagement.
5. Receive Invoices and Process Payments: Review invoices and process payments according to the agreed-upon terms.
6. Audit Services: Evaluate service delivery, supplier performance, and compliance with contractual requirements.
7. Maintain Invoice Records: Document transactions and retain accurate records for financial reporting and compliance.

While managing these seven steps, you should also consider which key performance indicators (KPIs) you want to track throughout your services procurement process.

Important Procurement KPIs

The KPIs you choose to track will depend on your organization's needs, but several metrics are commonly used:

• Cost Savings and Cost Avoidance
• Contract Spend
• Lead Time
• Cycle Time
• Compliance
• Total Return on Investment (ROI)

Every procurement KPI list will look different depending on your organization's goals. If you're unsure where to start with services procurement, it may be beneficial to partner with a total talent expert who can help identify the right KPIs and assist with managing the overall process.

The Benefits of Services Procurement Management in a Total Talent Solution

Visibility: Quickly and easily identify services procurement spending alongside staff augmentation expenditures.

Consistency and Compliance: Help ensure the contingent labor process remains consistent and compliant with your organization's policies for engaging services and temporary labor.

Change Management: Help business stakeholders access the talent they need to meet critical business objectives while ensuring key suppliers are managed and engaged effectively.

Tracking and Cost Management: Examine SOW spending by business unit and engagement, establish sourcing guidelines, and track supplier spending, deliverables, and performance.

Risk Management: Identify and manage potential risks that could negatively impact your organization.

Reporting & Analytics: An integrated technology platform and experienced teams provide comprehensive reporting and analytics to help organizations make more informed strategic decisions about services procurement and temporary labor.

Services procurement and Statement of Work (SOW) management services are part of Yoh's Enterprise Workforce Solutions program. Yoh develops and manages integrated processes to help ensure that SOW engagements are appropriately classified, agreements are accurately written, vendors are properly engaged, and services are efficiently delivered.