The Opportunity

Indirect Spend is an often neglected area that offers huge savings potential. Most organizations are cognizant of this opportunity. However, given the vastness and the complexity of the Indirect beast, they often focus their efforts on other cost-savings initiatives that provide a greater return on their time. At BCube, we have a team of ‘Indirect’ experts that have a proven track record of delivering cost-savings in complex, matrixed organizations. We will leave no stone unturned to help you in your quest for cost-savings – all you need to do is get in touch with us today!

What’s in it for you?

Having a strong process-based approach to tackling Indirect spend is imperative and can generate incremental savings in the long-term. Organizations can also benefit from 4 critical areas:
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Contract Compliance
Price Benchmarking

 

Policy
Consolidation

 

 

 

Understanding Indirect Spend

Typically, Indirect Spend within an organization will be anywhere between 10-30% of their Total Spend. Most of it, will be embedded several layers within seemingly non-traditional sources of spend. A thorough spend analysis, combing through traditional and non-traditional sources of data will unearth bulk of the Indirect Spend at most organizations. Here are some characteristics typical of Indirect Spend:

  • Maverick spending, or non-contractual spending that is done on an ad-hoc basis is a huge contributor of Indirect spend.
  • In some cases of indirect spending. the scope might be outside of the Purchasing department. 
  • There will be an inordinate number of suppliers offering products/services that are either low-volume or low-price.
Sources of Indirect Spend

Indirect Spend can be broadly classified into a few categories. But it is important to remember that there may be lots more, based on the type of organization and the industry in which it operates.

Professional Services
1. Consulting and Advisory services

2. Third Party services

3. Travel and Entertainment

Facilities Management
1. Telecom

2. Furniture and Office Supplies

3. Cleaning, Catering and Consumables

Marketing/ Advertising
1. Media Buying

2. Agency Spending and Printing

3. Promotions and Events

IT/ HR related services
1. Software and Hardware

2. Stationery

3. Recruitment spending and Training

Have a question about your Indirect Spend? Contact Us today!