Did you know that a lot of businesses are now moving away from trying to insource activities that do not directly influence their core purpose?
Many more companies are moving to managed services, either as a full outsource or a ‘with you’ hybrid model, looking to unlock the potential in their indirect procurement, allowing the business to focus energies and resources to their core purpose.
These outsource and partner models have traditionally been prevalent across business functions ranging from IT and Marketing to Customer Service. We are seeing more growing and established companies come to us looking for a partner to manage their Indirect procurement.
Indirect procurement is often overlooked compared to direct procurement, the important goods and services that you work hard to develop and sell on to your clients. Yet for CFOs and business leaders, indirect procurement represents a significant opportunity and risk area. Managing indirect spend effectively can unlock cost savings, improve supplier performance, reduce reputational and regulatory risk and enhance operational efficiency.
What do businesses hope to gain from these partnerships?
Visibility and Control
Indirect procurement is typically decentralised, with multiple departments making purchasing decisions. This fragmentation leads to poor visibility into spend, making it difficult for finance leaders to track costs, identify inefficiencies, or enforce compliance. Without centralised data, forecasting and budgeting become guesswork.
Stopping Maverick Spending
When employees bypass procurement processes to make purchases directly, it results in maverick spending. This not only undermines negotiated supplier agreements but also inflates costs and introduces compliance risks. CFOs often struggle to rein in this behaviour without robust systems and clear policies.
Reducing Supplier Proliferation
Indirect procurement often involves a large number of suppliers, many of whom provide similar services. This supplier sprawl complicates management, increases administrative overhead, and dilutes negotiating power. Rationalising the supplier base is essential but requires time, data, and cross-functional collaboration.
Consistent Procurement Processes
Unlike direct procurement, which is often governed by strict protocols, indirect procurement processes vary widely across departments. This inconsistency leads to inefficiencies, missed savings opportunities, and difficulty in enforcing financial controls.
Strategic Focus
Finance leaders may prioritise direct procurement due to its impact on core operations, leaving indirect procurement under-resourced. However, indirect spend can account for 20–50% of a company’s total expenditure. Treating it strategically—through category management, supplier partnerships, and spend analytics—can yield substantial benefits.
Plugging Technology Gaps
Many organisations lack the right tools to manage indirect procurement effectively. Legacy systems or manual processes hinder data collection, analysis, and decision-making. CFOs need to champion digital transformation in procurement to enable automation, real-time insights, and better governance.
Improved Compliance and Risk Management
Indirect procurement often involves services with regulatory implications—such as legal, HR, or IT. Without proper oversight, companies risk non-compliance, data breaches, or reputational damage. Finance leaders must ensure procurement aligns with risk management frameworks.
Indirect Procurement As A Strategic Imperative
For CFOs and finance leaders, indirect procurement is more than a back-office function—it’s a strategic lever. Addressing its challenges effectively in-house requires investment in technology, process standardisation, and cross-functional collaboration. By bringing indirect expertise partners into the mix, it is possible to rapidly bring spend under control, driving value, reducing risk, and supporting sustainable growth.
If any of this resonates with you, feel welcome to just have an informal chat with us, and learn how we can help transform your indirect program into what it should be – strategic, streamlined and sustainable.
If your organisation is facing procurement challenges, whether it’s spend visibility, supplier consolidation, or optimising operational buying, now is the time to take action. Let’s start the conversation.
