Trends in e-sourcing III: Managing indirect spend

All available evidence indicates that indirect spend is by far the biggest source of non-compliant, or maverick, spend. Indirect spend is defined as spending that is not directly related to production, for example stationery or the hiring of temporary staff.

European Indirect Spend Management 2011 highlighted the challenge unmanaged procurement spend poses for firms of all sizes. It estimated that across the European economy approximately €433 billion of the €1,300 billion of indirect procurement expenditure falls under the category of maverick spending. The major problems associated with managing indirect spend include compliance with preferred supplier lists and contracted rates, poor spend visibility, and not taking advantage of IT-enabled efficiencies.

Even when organisations are utilising automated procurement and e-sourcing software, it appears that employees are either unwilling or unable to purchase through the correct channels of approved suppliers and contracted rates.

e-Sourcing systems must fully capture the spend data that is essential to tackling the problem of maverick spend, so managers can see who is spending when, and on what. They must also encourage user adoption through accessibility and usability. Support services can help with identifying the key problem areas, and ensure procurement teams get the most from the application.

Read more:

Trends in eSourcing I: Easy does it with usability and user adoption
Trends in eSourcing II: Project management empowering modern procurement professionals
Trends in eSourcing IV: Affordability – making your time and money count
Trends in eSourcing V: SEPA 2014 – matching innovation in e-payments

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