What Businesses Need to Know About Indirect Spend
By Anna Duin | August 08, 2018
No matter how big or small your business is, you have to be proactive and strategic about your business indirect spend. Left unchecked, indirect (or “unplanned spend”) can quickly become a formidable obstacle.
In this video, group purchasing expert and Una CEO Anthony Clervi shares the one thing all businesses should know about their indirect spend. He also addresses the common mistakes to avoid, and questions you should ask your team. It’s five minutes worth of hard-won insights.
Don’t have time for a video? Keep reading for the key takeaways.
The Most Important Thing You Should Know About Business Indirect Spend
Common, Unplanned Spend Mistakes
- Being reactive and not taking the time to be strategic
- Not thinking outside-the-box
- Trying to keep everything in-house, missing out on key partners like GPOs
- Boiling the ocean, doing a little here and there, but not moving the needle
Questions to Ask Tour Team
- What are we doing now to manage our indirect spend?
- What data can we review?
- What is the ROI of our current efforts?
- Do we have decentralized purchasing?
- Do we have any category management?
- Are we getting everything we need from our distributors and manufacturers?
- Do we need to increase our buying power?
- What are our goals?
- What outside resources could we leverage?
- What small changes could we make that would have a significant impact?
Indirect Procurement Strategy
Challenges for Independent Companies
The problem with indirect spending is that although the needs are consistent, the means by which you procure them vary. Here are a few of the challenges that stand in a company’s way of getting the lowest pricing available for their day-to-day needs.
- A smaller-than-average spend: Purchasing volume for a small to mid-sized company can be lower, meaning the procurement lacks leverage in the negotiation process with vendors.
- Lower relational capacity: Building fruitful relationships with a large number of big suppliers is a time drain for companies that have limited resources.
- Difficult to evaluate: Indirect spend often cannot be anticipated or captured, making it hard, if not impossible, to account for and accurately budget.