Perfect Your Indirect Through Organizational Support

When an executive thinks of procurement management, he or she most often considers management of direct product or service purchases. Yet, in many ways, corporations are themselves consumers, obtaining whatever necessary assets required for operations to run as smoothly and efficiently as possible. Whether office supplies, fittings and fasteners, or disposable tools, indirect materials can present a large potential for cost savings. This is no surprise to the attendants of ProcureCon Indirect East 2015 being held February 11-13 in Florida. Source One looks forward to attending and sharing our thoughts on how to refresh the ideals of the indirect materials procurement process. One key area companies can see an optimized indirect procurement practice, for instance, is through gaining organizational support.

"If you think that you are a second-class citizen versus direct procurement, then you are going to get that reaction," said Brian Davy, head of non-production procurement at Jaguar Land Rover. "We're not the poor relation of direct purchasing, what we do is fascinating and varied." Making the strategic sourcing of the indirect procurement team attractive to the room of
C-suite executives is part of attaining the best materials for a business. A corporation cannot function on raw monetary capital alone, which is why it needs to be invested in both physical and intangible products that can improve the overall functions of the workplace.

There are many cloud computing solutions that aid in the process of streamlining communication between departments—a strong component of gaining organization-wide indirect procurement support. Pat Garrehy, CEO of Rootstock Software and contributor to Manufacturing Business Technology, noted that enterprise resource planning can offer companies the opportunity to reduce excess inventory from 20 to 30 percent, as it provides them with a better way to manage raw materials, parts and finished goods. Ultimately, a cloud-driven ERP solution allows indirect obtainment teams to anticipate product requirements, leading to firmer commitments with predictable lead times.

In addition to widespread support of indirect procurement, there are significant cost savings opportunities associated with ERP and procurement software that can manage and organize information, preventing the need for multiple spreadsheets and email messages coordinating inventory.

Source One loves to discuss this area, as it is the foundation of their publication, Managing Indirect Spend: Enhancing Profitability Through Strategic Sourcing. If you have any indirect procurement thoughts and you’d like to exchange ideas at ProcureCon Indirect East this year, please contact us at hgrossmuller@sourceoneinc.com and we can schedule some time to meet.

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