Indirect Spend Management: An Easy Putt for the Quick Serve Restaurant (QSR) Industry

Dmitry Vereshchagin/Adobe Stock

While the market for procure-to-pay (P2P) solutions has exploded over the past decade, in terms of spend coverage, several notable blind spots remain across all industries. Usually, the gaps exist in notoriously complex areas of direct. On the indirect side of the house, the holes generally manifest in purchased services. But in the case of the quick serve restaurant (QSR) industry, the coverage problem isn’t limited to a few categories — it’s the other half of the enchilada.

While the QSR industry is known for its effective management of direct spend, unmanaged indirect spend is another story. Especially for players that have achieved significant scale, it has now been revealed as a significant operations gap — a missed opportunity to restructure costs. Beyond delivering an important impact to bottom lines, bringing indirect spend under management has been demonstrated to improve overall store performance, regardless of whether the store is corporately owned or franchised.

Because QSR indirect transactions tend to be high frequency, fragmented and often made with unapproved suppliers, existing systems don’t effectively address the number or diversity of items and services being purchased. And because there’s a myth that says indirect spend is best left to local or regional managers, item-level detail is rarely captured. The lack of visibility has made it impossible for corporate procurement leadership to do what should come naturally: take advantage of their buying leverage.

But that’s just one obvious problem. The fact that there is no visibility results in related quality and performance issues that often go undetected.

Setting up accountability for indirect purchases is closely connected with data collection and consolidation. Effective categorization and the coupling of automated purchasing systems with e-catalogs deliver aggregation and standardization. By limiting requisitioners to see only the catalogs of goods and services already under contract from selected suppliers, volume commitments can be achieved and off-contract spending reduced.

For technology to enable this, the usual suspects (i.e., ERP and the major P2P/S2P solution providers) offer similar capabilities, albeit in a far “bigger” framework. One provider with capabilities distinctly tailored to this sector, however, is BuyerQuest, as its solution allows for customization at the store level. It supports a hierarchy that works well for QSR, hospitality and, more generally, certain types of retail. Such a marketplace environment offering can also be dropped in with minimal disruption — and tie back to the aforementioned and more deeply embedded/fixed systems that manage direct.

For the QSR industry, while the indirect side of the house does not compare to the size, complexity and importance of its direct spend, it absolutely presents one of those rare “tap in” opportunities. QSR procurement pros looking for a can’t-miss business case need look no further.

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