How much does internal procurement actually cost a company?

To answer this, a company would have to first review the cost of the individual employee(s).  Wages, Optional Benefits (paid vacation, insurance, etc.), Required Benefits (FICA, FUTA, State UI, Workers Comp, etc.), and Expenses (phone, office, etc).

Then a company would need to review the cost of having multiple suppliers for materials. Areas of review to include: multiple shipments received, increased warehouse labor, an increase in the number of skus managed, and an increase in AP activity.

So does the cost outweigh the savings that internal procurement provides to the company?

When evaluating costs of internal procurement individuals/teams in regards to the purchase of packaging materials, outsourcing this role must be considered.  All of the above costs are transferred to the Procurement Outsourcing Company.  In addition, warehousing costs are reduced and cash can be redirected to capital improvements and operations.

Remove the  procurement function from an internal individual/team and outsource it to an experienced team of individuals whose sole source competency is the purchasing and management of packaging materials.

We ask our clients to review the economics of their situation, rather than the status quo.  The economics are compelling and will assist to determine the benefits received by outsourcing the procurement function of packaging.


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