Why Does Indirect Spend Matter?
Up to 40% or more of a company’s expenses might be Indirect Spend.
Optimizing procurement can save up to 25% of Indirect Spend.
Improving Indirect Spend procurement can deliver up to 10% to the bottom line.
Management of Indirect Spend is challenging, but the transformative effect on the business justifies the effort. Lower costs are not the only benefit. Rigorous specification, supplier qualification and procurement processes can improve the products and services used by the company in ways that significantly improve the business and give you a competitive advantage.
Gain Control & Harvest Savings To reap savings from your Indirect Spend, companies must strategically manage the processes and people involved. Typically, a business must commit to: • Executive sponsorship of a comprehensive review and analysis of Indirect Spend • Business processes that identify, categorize and aggregate items for competitive bid • Systems, such as Purchase Order (PO) processing, that best fit the business need and handle all the company locations • Support processes that help departments select qualified suppliers and negotiate sound contracts • Collaboration between those who know how to use an item and those who can get the best deal for the company • Economic, government and industry monitoring for pricing, risk assessment and changing market conditions • Measurements and visibility that keep savings on track and garner incremental, long-term improvements
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