The Value of Indirect Procurement
The value of indirect procurement is overlooked by many. Indirect procurement is the sourcing of goods and services not related to manufacturing for a business to enable it to maintain and develop its operations. Indirect procurement categories include, but are not limited to:
- Marketing-related services (media buying, agencies)
- Professional Services (consultants, advisers)
- Travel management services
- IT related services (hardware, software)
- HR related services (recruitment agencies, training)
- Facilities management and office services (telecoms, furniture, cleaning, catering, printers)
- Utilities (gas, electricity, water)
- Consumables (grease, oil etc.)
- MRO (Maintenance repair and operations)
- Capital Goods (Plant and machinery)
- Fleet management
This area of procurement is often seen as less strategic, relatively immature, and less valuable than direct procurement. This is a misconception that can lead to missed opportunities for cost savings, efficiency gains, and innovation. Indirect procurement can account for up to 50% of a company’s total spend. It can have a significant impact on the customer experience, employee satisfaction, and operational performance.
To unlock the full potential of indirect procurement, companies need a vision that combines cutting-edge tools and practices with traditional approaches to category management. Some of the key elements of this vision are:
- Strategic sourcing that leverages market intelligence, supplier relationship management, and negotiation skills. This allows you to optimize contracts and reduce total cost of ownership.
- Demand management that involves engaging with internal stakeholders to understand their needs, preferences, and consumption patterns. influencing their behaviour to reduce maverick spend and optimize demand.
- Process automation that uses digital platforms and solutions to streamline and simplify the procurement process. From requisition to payment, reducing manual input, errors and inefficiencies.
- Performance measurement that uses key performance indicators (KPIs) and dashboards to monitor and evaluate the effectiveness and efficiency of the indirect procurement function. This allows businesses and their suppliers toidentify opportunities for improvement.
However, achieving this vision can be challenging for many organizations due to the complexity and diversity of indirect procurement categories, the lack of sufficient resources and capabilities, and the resistance from internal stakeholders. This is where Ebit can help.
We are a leading provider of indirect procurement services that offers a comprehensive suite of solutions to help companies optimise their indirect spend. Our mission is to help companies achieve their goals by optimizing their indirect spend.
Our services include:
- Spend analysis that uses advanced analytics and artificial intelligence to provide insights into spending patterns, trends, opportunities, and risks across all indirect categories.
- Category management using best practices and benchmarks to develop and implement category strategies that align with business objectives and deliver value.
- Sourcing support that uses market research, supplier evaluation, contract negotiation, and risk management to source the best solutions and suppliers for each category, ensuring compliance.
- Procurement outsourcing that leverages Ebitip’s experienced team of procurement professionals to manage the end-to-end procurement process for selected categories or regions.
- Procurement transformation projects. By using Ebitip’s proven methodology and tools to assess the current state of the indirect procurement function, design the future state vision, and implement the required changes.
By partnering with us, companies have benefitted from:
- Cost savings across all indirect categories at a ROI of 5:1
- Efficiency gains in terms of cycle time reduction and process simplification.
- Innovation opportunities by accessing our network of suppliers and partners that offer cutting-edge solutions for various business needs.
- Customer satisfaction improvement by ensuring consistent quality and delivery of goods and services across all touchpoints.
- Employee satisfaction improvement by freeing up internal resources from non-core activities and enabling them to focus on strategic initiatives.
Ebit is more than just a service provider. It is a trusted partner that understands the challenges and opportunities of indirect procurement in today’s dynamic business environment. Our mission is to help companies achieve their goals by optimizing their indirect spend.
To learn more about our services and how we help your business grow contact us at [email protected].