5 Essential Questions to Evaluate Your Indirect Spend Program
Indirect spend refers to the purchase of goods and services a company makes that are not directly tied to the production of its core products or services. Examples of these spend categories include:
Information Technology
Marketing & Advertising
MRO (Maintenance, Repair & Operations)
Professional Services
Legal
Facilities Management
Insurance & Financial Services
Travel Management
HR Services
Office Supplies
Cumulatively, this spend can account for 25-40% of a company’s budget. However, we often see the management of these spend categories is sometimes overlooked. This could be for a variety of reasons, but often it’s due to lack of visibility into indirect spend, insufficient resources, and a tendency to prioritize direct procurement due to its immediate impact on production and operations.
It's important for all leaders to ask their procurement teams these 5 questions to assess the overall performance, financial impact, and efficiency of their indirect spend programs. These questions can help uncover hidden savings opportunities, identify inefficiencies, and ensure that indirect procurement strategies align with the company’s overall goals.
