Indirect Spend

What is Indirect Spend?

Indirect spend refers to purchasing goods and services that support business operations. These include office supplies, décor, or stationery. These items help ensure smooth operations and support overall productivity.

Benefits of Indirect Spend

Employee-Driven Spending: Procurement teams manage employee-driven expenses like travel expenses or equipment replacements. These indirect costs could spiral out of control if a business doesn’t have tight guidelines to prevent overspending.

Supplier Relationships: Strategic sourcing and supplier partnerships by procurement teams can reduce costs and secure discounts. For instance, if all computer displays were purchased from the same supplier, they might qualify for a discount and be able to make some savings.

Spend Control: Monitoring indirect spend prevents waste and helps maintain budget discipline. The only way to affect the bottom line is to keep expenditures under control.

Measuring Performance: Cost savings are the key metric of indirect procurement. Consolidating and categorizing all indirect spend allows procurement to assess performance and optimize expenditures.