Optimizing Indirect Expenditures

Achieve efficient and lasting savings in the procurement of indirect needs.

 

Maximizing Opportunities in Procuring Indirect Needs

Procuring indirect needs is one of the most significant spending areas for many organizations. Depending on the industry, it can account for 20% to 30% of the total purchasing volume. Indirect spend encompasses all services, capital goods, and consumables necessary for daily business operations that do not directly contribute to a company’s value creation process. This includes services and indirect materials for specialized departments, such as IT and telecommunications expenses, logistics, facility management, or waste disposal.

Our experience from more than 2,500 indirect spend optimization projects highlights substantial, often overlooked savings potential. While the goal is to sustainably reduce costs across the company, indirect procurement is frequently neglected due to a lack of transparency in expenditure items and the absence of a structured procurement process. However, optimizing indirect procurement can deliver quick and measurable results: structured procurement of indirect needs can lead to cost savings of 10% to 20%.

 

In indirect procurement, the challenge usually lies in the decentralized company. Procurement processes are often managed within individual departments and not centrally via procurement (maverick buying).

We support you in analyzing your requirements, creating transparency, and developing a clear requirements structure. In close coordination with internal users and stakeholders, we advise you on demand management and implement standardized, sustainable processes, taking into account possible digital procurement applications.

To ensure long-term success, the solutions developed are consolidated in individual training sessions. We can also support you in operational procurement through bundling and renegotiation with suppliers. Within the scope of our consultancy, the use of more sophisticated methods such as respecification or tail-end management is also possible.

Find out how we can support you with effective solutions.

Focus topics in indirect spend

Digitalization and IT procurement

IT requirements are changing rapidly in the course of the digital transformation.

As a result, the spend and thereby the importance of IT procurement is increasing dramatically. The secure and fast provision of large amounts of data, innovative applications and new virtual services is not only a major challenge for IT management. The skillset of procurement must also constantly evolve. For this purpose, procurement should be integrated into the processes at an early stage. Optimizing IT procurement pays off in two ways: in reducing the costs of hardware and software, and in the efficient procurement of IT services. Thanks to our expertise, we can support you in this and, despite the market power of some manufacturers, achieve optimal conditions through individual service and price models.

 

Construction and facility management

Material scarcity, shortage of skilled labor, increased wages, and financing are just some of the issues that have hit the construction sector hard in recent years.

The speed of modernization initiatives has dropped, with repair and maintenance as the focus of many operations. Strength in procurement has never been more key to help counteract and control skyrocketing costs while, in parallel, ensuring we procure materials and plan projects with a lower environmental impact.

We help our clients navigate these challenges through:

  • Negotiating commercials and terms while ensuring compliance with regulations, project specifications and sustainability objectives
  • Identifying and selecting qualified contractors and vendors across fields and markets leveraging technology and automation in the procurement process
  • Planning and optimizing the acquisition of materials, equipment, and services for projects
  • Developing best-in-class budgeting and forecasting methods with accurate tracking across costs and timelines
  • Managing supplier relationships and risks through the project lifecycle

 

Marketing procurement

The marketing spend landscape has changed drastically with the COVID-19 pandemic accelerating the shift in budget to digital channels such as social media and e-commerce, and away from less effective traditional advertising.

An increased emphasis on big data and targeted marketing combined with increased spend is on capturing market share as the economy recovers only intensifies the need for a more strategic marketing and procurement partnership and a more flexible and agile approach to sourcing.

With our extensive project experience, we help our clients:

  • Negotiate contracts to optimize performance measures and enhance return on marketing investment (ROMI)
  • Increase collaboration between marketing and procurement through a goal-oriented approach with clarity around value-add
  • Take the leap to engage new suppliers focussed on digital and challenge the status-quo
  • Elevate decision making with a data driven approach

Logistics and indirect services

Maximizing and improving operational excellence can be a vital component of competitive advantage.

Especially in today’s ever-changing market landscape, affected by supply chain disruptions, trade instability, and the rise of digital operations, managing operational costs across central indirect services such as logistics, energy, and indirect materials (e.g., MRO) to drive bottom-line growth must be a key priority.

Done right, optimization of such services will contribute to reduced cost while simultaneously driving innovation, quality and sustainability in parallel to reducing your risk position and facilitating resilient supply chains. Thanks to our extensive project experience, we understand the market requirements, use developed best practices, and have the most recent price benchmarks for all relevant commodity groups in indirect spend. To unlock the full potential, we partner with you to ensure transparency and establish state-of-the-art strategies to accelerate results while building customized capabilities to your unique needs.

 

 

 

 

Find out more about our indirect spend expertise

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