Indirect Procurement - Company
Optimizing the value add and increasing stakeholder satisfaction in Indirect Sourcing
Definitions and FAQs on Indirect Procurement
What is the definition of Indirect Procurement?
There are 2 types of procurement (or sourcing or purchasing - Note: definition of those terms might vary from one organization to another) in an organization
a. the direct (or strategic) procurement containing all spend that is "for re-sale", for example in an industrial company all spend that goes directly into the product sold and
b. the indirect (or non-production or non-strategic) procurement that encompasses the sourcing of spend that is "not-for-resale". In an industrial company that would be the sourcing of all purchases that are not directly entering into the products produced.
What categories (or commodities) are included in the Indirect Procurement Spend?
Indirect Procurement can be further divided into categories (or commodities). It is important that company-wide the definition of those categories is shared and that they are commonly understood.
Typically these Indirect Procurement categories are:
Transport (road, sea, air), IT & Telecommunication, Building Facility Management, Marketing & Communications, Energy, Investments for Production and Industrial Supplies, Travel, Training, Temporary Employment, Construction, Office Supplies, Legal and Insurances, Subcontracting of Packaging and Storage.
Clearly defining categories in your organization, ensuring a common understanding across the procurement department as well as the internal departments that require the purchase of those (those are the internal "clients" or stakeholders), defining clear roles and responsibilities of who does what and when, having the complete set of robust Indirect Procurement processes in place are cornerstones on the way to achieve sustainable top-level results now and in the future.
How can I make use of a planned audit to additionally improve bottom-line performance sustainably?
Taking advantage of planned audits (ISO 9000, etc.) is a great opportunity to - in parallel - sustainably improve the way a company manages its Indirect Procurement Spend by defining clear roles and responsibilities of the Indirect Procurement agents and the internal stakeholders. We help companies to set up an Indirect Procurement organization that follows a collaborative approach leading to improved employee satisfaction (of the procurement team but also of the internal stakeholders interacting with Procurement), that delivers bottom-line productivity whilst optimizing the perceived service level.