INDIRECT

PROCUREMENT
@Ravi Nishant
 WHAT IS INDIRECT
PROCUREMENT?

Indirect procurement, involves the purchase of

the goods and services, supplies and materials —
including computers, hardware, software,
maintenance, utilities and travel — that are
required for the day-to-day running of a business.
Challenges in Indirect Sourcing:

Low Average Spends:The product volume is generally on the

lower side because of the wide assortment of product and
service categories and their suppliers.

Frequent low-volume Purchases:

Uncontrolled/ Un-negotiated Spend:

Driven More by Internal Stakeholders:

Requires Diverse Experience

 Curbing Indirect Spend-
A strategic Approach

Significant saving opportunities can be identified for both demand and supply driven
organizations in a structured manner.
 Curbing Indirect Spend-
A strategic Approach

Managed Spend, Use of Automation, and Measurement

Choose Preferred Suppliers:

Set generic KPIs: These include contract compliance,

customer satisfaction, and cost competitiveness, and
continuous improvement.
Many studies and experts from industry suggest following cost
saving opportunities from indirect procurement areas, which
constitutes a large chunk for most of the organizations:
 Define requirements and
specifications for identifying
sourcing opportunities

Proper understanding of the current service & specification

requirements can help in creating value from the internal
supply chain.
 Steps to Exploit Indirect
Procurement to Reap Possible
Cost Saving Benefits

A structured approach is required to acquire savings out of

indirect spending. This would require identifying areas with
significant saving opportunities and chalking out an action plan
to accrue savings in the long run. Managers need to adopt a very
fundamental approach with the PDAC (Plan, Do, Act, Check)
concept.
 Conclusion:

The focus on indirect sourcing should shift from mere

cost reduction to value creation for internal stakeholders
and organizations of all scales.
Sourcing and purchase function has the ability to
capture the essence of new trends, new technologies,
and innovations to help management in making an
informed decision.
Use scenario and contingency planning as part of your
strategy to ensure they have good sourcing plans in
place.
DID I
HELP?
Belleza

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