What is Indirect Spend, and why is controlling it essential?
Well, it’s all about protecting your profit.
Accounting for up to 30% of your organization’s total expenses, Indirect Spend describes the purchasing of goods and services that contribute to the organization’s day-to-day operations. Therefore, it should always be top-of-mind for CEOs, CFOs, department leaders, and finance teams.
With policies and processes that manage Indirect Spend your business will protect (and enhance) its profitability. Gain exclusive business insights with Supply Tigers’ Opportunity Assessment.
Due to its complexity, procurement teams may not give their Indirect Spend categories enough attention.
Effective indirect procurement strategies have a significant and lasting impact on an organization’s bottom line. It’s a steadily increasing portion of overall spend businesses can’t afford to ignore.
How Do You Manage Indirect Spend?
Managing Indirect Spend effectively depends on the following factors:
- Full visibility of spend
- Spend and category consolidation
- Strategic sourcing
- Employee education
- Change management mindset
Step #1: Organize Spend Data & Improve Visibility
Supply Tigers’ Opportunity Assessment has two parts: data analytics and a questionnaire.
First, our experts analyze your organization’s vendor list/AP file and categorize them. From there, they’ll see which suppliers exist in their Active GPO® program (which would mean automatic savings) and determine which suppliers they can leverage.
Then, you’ll complete a brief questionnaire needed to examine existing contracts that may conflict with our GPO program (ie. Clients may have a contract with a competitor).
Step #2: Implement eProcurement Technology
No matter your industry, efficiency and visibility are among the top priorities for purchasing teams. With Supply Tigers’ Marketplace as a Solution (MaaS™), you have access to innovative strategies that increase savings potential and drive purchasing efficiency.
MaaS™ is a low-cost buying platform where categories are aggregated with preferred suppliers and spend controls, ensuring buying only happens for the products and services approved for purchase. This solution revamps traditional purchasing and refines business operations. MaaS™ facilitates automated and advanced purchasing, payments, vendor invoices, and spend management.
Don’t have enough staff to handle admin work? Poor communication with suppliers? Lack of visibility around spend? MaaS™ handles your toughest, most costly challenges and saves you time.
We understand your key issues and created MaaS™ to solve them.
Step #3: Establish a Relationship with a Group Purchasing Organization
All GPOs are not created equally.
Some prioritize value delivery through total cost reduction (Active GPO®), while others provide competitive purchase prices (passive GPO). If you’re looking for ways to leverage your spend, consider GPOs to meet the needs of your business.
With traditional GPOs, companies have to figure out the best ways to get value from their GPO contracts. They don’t receive any support for in-plant services or procurement teams.
Alternatively, Active GPO® provides tremendous value to mid-size companies. We created this solution to drive out costs, create applicable reporting metrics, and provide the right service models and supplier resources.
Your journey of Indirect Spend is ongoing—which is why your business needs constant engagement and reporting. Rather than the passive GPO’s self-serve model, Supply Tigers Active GPO® works alongside your team to continuously drive out cost and inefficiencies.
Minimize your internal staff’s workload with a solution that expands as your company grows. Bypass resource constraints and insufficient buying power. Access proven procurement automation and solutions to simplify how your organization buys.
Active GPO® is the shortcut to savings.
Manage Indirect Spend With an Opportunity Assessment
Indirect Spend is an essential aspect of your company’s bottom line and profitability. Without adequate and consistent monitoring to assess supplier performance, it’s nearly impossible to determine areas of improvement.
Our comprehensive Opportunity Assessment quantifies cost reduction, audits traditional procurement, and gives valuable insight into your company’s purchasing data. After implementing our recommendations, clients see an average of 10-20% savings in indirect material costs.
Are you exploring ways to combat inflation? Get in touch with one of our Opportunity Assessment advisors today.
Regain Control of Your Indirect Spend.
Schedule a call with one of our advisors and learn more about how an Opportunity Assessment can uncover massive savings for your organization.
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