Indirect spend refers to an organisation’s expenditure on goods and services which are not directly incorporated into the product or service delivered. Indirect spend can be thought of as all the supporting or overhead expenditure, whether corporate or factory related.
For most organisations, most spend will be on direct or core materials. However, indirect spend can form a surprisingly significant value but with spend spread over a wide scope of spend categories and suppliers, and with much indirect spend managed by non-commercial functions in an organisation, indirect spend is often over-looked. In retail, for example, indirect spend (or GNFR – goods not for resale) can account for one seventh of turnover.
Typical indirect spend categories include:
- Office supplies
- HR services
- Promotional products
- Fleet & Logistics
- Professional services
- Facilities management
- Maintenance contracts
- Maintenance spares and repair
- Postage and Courier
Quite rightly, most organisations will focus on their direct spend. Buying teams will typically manage strategic suppliers and core, direct spend categories. Indirect spend is often left to specialist departments to manage without the influence of professional procurement. As a result, indirect spend is under-leveraged and provides an excellent opportunity to deliver savings.
Indirect spend procurement cost reduction – one pass through your indirect spend to improve service, consolidate suppliers and deliver savings - delivered on a 100% success-based fee model.
Indirect spend managed service – ongoing management of indirect spend to allow client teams to focus on core, direct categories
ProIntell – ongoing spend analysis, review and management to ensure indirect spend stays optimised
Case studies and recent developments:
Why choose Procura?
We are specialists in procurement cost reduction. Our consultants work closely with all kinds of organisations to improve their profitability through identifying, delivering and maintaining savings in procurement expenditure. A relentless focus on bottom-line results combined with our deep supply-market knowledge ensures that spend is optimised – and stays optimised.
- Our team has achieved over £25m in savings
- Projects are self-funding with no risk for clients
- We work closely with your people to embed best practice
- Our unique spend intelligence service ensures ongoing savings