For the untrained observer – or typical tech investor for that matter – indirect procurement is procurement these days, at least from a technology perspective. Few outsiders or spend lurkers even know what direct procurement is, despite the fact that much of a typical manufacturer’s cost of goods sold (COGs) are largely driven by it. Yet direct procurement remains pretty much a niche (albeit a giant one) to itself.
Indirect procurement systems and e-invoicing supplier networks do not begin to address the challenges of supporting total cost modeling, inventory management, supply chain network design, logistical support, project and program management, complex document exchange and supplier integration, among other areas. Despite this, we are certain that direct procurement will become better integrated with other parts of the broader supply chain, and in some cases, it will begin blurring the line between operations and purchasing.
We wrote about this in our direct procurement studies, but even just within sourcing, the ability to more robustly model downstream supply chain activities (e.g., commodity/currency volatility, demand volatility, mix shifts, contract compliance, logistics/energy procurement, tax, etc.) is becoming critical for large supply chain captains. Unfortunately, many direct procurement vendors won’t be experiencing a breakout market, but rather continue to plod along in their niches.
But in 2015, more providers, consultants and non-procurement business stakeholders will discover the marvel of direct procurement – and the trillions of dollars in global trade and commerce that it supports.
Stay tuned for our full 2015 predictions report, coming soon! Sign up below to receive the full report when it is released!