Indirect spend includes all non-production-related purchases such as office supplies, software, marketing and travel—that support day-to-day operations. Despite its complexity, properly managing indirect spend can unlock major cost savings and improve procurement efficiency. Below are five actionable strategies to optimize your indirect spend.
Five Proven Strategies to Improve Indirect Spend Management in Procurement
1. Gain Visibility and Consolidate Spend Categories
Visibility is the foundation of indirect spend control. Without it, cost-saving opportunities remain hidden.
- • Conduct a detailed spend analysis across all departments and locations.
- • Group purchases into clear categories (e.g., IT, office supplies, maintenance).
- • Use AI tools to automate classification and detect spending patterns.
2. Strengthen Supplier Relationship and Contract Management
Well-managed suppliers and contracts reduce risk, drive compliance, and unlock better pricing.
- • Centralize contract storage and ensure regular review cycles.
- • Negotiate terms based on spend volume and performance metrics.
- • Use clear SLAs and KPIs to measure supplier performance.
3. Educate and Empower Employees
Empowered employees reduce maverick spending and improve policy adherence.
- • Provide training on procurement tools, policies and approved vendors.
- • Implement guided buying platforms to simplify compliant purchases.
- • Offer mobile access to procurement systems for remote teams.
4. Create a Sourcing Plan with KPIs
A structured sourcing strategy keeps efforts aligned with organizational goals.
- • Define sourcing goals and measurable KPIs (e.g., savings, compliance rates).
- • Involve key stakeholders early to ensure alignment and support.
- • Regularly assess performance and refine strategies based on data.
5. Invest in an e-Procurement Platform
Digital tools streamline procurement and enhance control over indirect spend.
- • Automate purchase requests, approvals, and invoice processing.
- • Use vendor portals to ease onboarding and communication.
- • Enable centralized dashboards for full procurement visibility.
Managing indirect spend doesn’t have to be overwhelming. With the right strategies, visibility, supplier control, employee education, structured sourcing, and digital tools companies can drive savings, improve compliance, and enhance procurement efficiency. Turn your indirect spend into a source of value and competitive edge.