Why is Procurement so Bad at Managing All Indirect Spend?

Later this week, I’m participating on a webinar with Deem’s Patrick Grady titled Order Out of Chaos for Indirect Spend. The premise of the discussion is that while many organizations are starting to more actively manage indirect spend today through e-procurement and related initiatives, there is so much more they can be doing. Our thesis is that overall indirect spending remains chaotic and unmanaged in most organizations today despite initial forays to bring it under control.

We believe that to truly manage indirect spend, we must fully understand it first (this is one of the potential dangers of relying too heavily on the services of a GPO or a vendor such as a Grainger directly which wants to “own the problem” for you). Without understanding all elements of our spending, there’s a strong chance that we’ll lose opportunities to create savings or other forms of value (e.g., inventory reduction) from it past a certain level.

A good place to start the discussion of indirect spending is to tackle these questions first (we’ll be doing this on the webinar but it’s also a useful exercise for procurement and finance managers to answer themselves):

  • Why is indirect spend so difficult to manage?
  • What common roadblocks and technology impediments to managing indirect spend do we face?
  • How can we find the right balance between policy enforcement and user adoption?
  • What are the best ways to move an organization from a “perfect order” to a “perfect project” and “perfect trip”?
  • What are the top benefits of integration for comprehensive indirect spend management?

As we’ll discuss on the webinar, technology including but not limited to just P2P is of critical importance to tackling broader indirect opportunities. Additional technologies to consider and integrate into indirect buying and management both within procurement and the business include T&E (e.g., Deem, Concur, Coupa, etc.) and specialized indirect/services category solutions (e.g., conference/event-focused procurement management tools like Eved). And, of course, there’s more to it as well.

Join Patrick and Jason this week to learn more about the challenges of managing indirect spend and a list of tips for overcoming them.

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