Managing Indirect Spend
Organizations face a number of issues while dealing with their indirect spend management. Procurement teams in most product-based companies have traditionally focused on reducing their direct spend, and therefore lack the experience and the art of indirect spend management. Further, indirect spend management is spread across a broad spectrum of commodities, thereby increasing the supplier base and the supply chain management complexities.
Indirect spend is often under valued and under resourced but full of potential in terms of cold hard savings as well soft benefits, although often seen too complex to manage internally as the spend can be easily split between tens of categories with multiple sub-categories, often highly decentralized and without proper control, agreements, processes etc. Because of this, most companies have often mainly focused on direct procurement in the core commodities while leaving indirect spend managed on ad-hoc and selective projects.
For any company, small or large, managing indirect spend correctly can be a significant way of affecting the bottom line and understanding better how the company functions on daily basis. We strongly believe indirect spend should not be pushed aside just because of the challenges.
Many companies are hesitant in investing into dedicated teams and tools because of these challenges and as indirect procurement specialists, we understand this and offer a simplified, low risk and fast result model by managing the spend, all or selected categories, on behalf of you on a collaborative model as a service.
In the current economic downturn, it is important for companies to control indirect spend management for efficiency. For companies in the services and supplies sector, it is even more critical, since optimizing their indirect spend may significantly affect their bottom lines.
Managing Indirect Spend professionally can lead to significant savings ranging from 7 to 25% on average depending on spend category!