The right indirect purchase strategy can save your business money
What is indirect purchase?
Indirect purchase supported by efficient purchasing software, is defined as any acquisition that does not pertain to a company's core products or services. These items are typically procured for utilization in the business's day-to-day operations, encompassing office supplies, cleaning materials, computer equipment, travel expenses, and marketing materials.
While indirect purchasing might appear as a minor component within the overall supply chain, it can still constitute a significant portion of a company's total expenditures. Consequently, the procurement team holds the responsibility of ensuring that the business procures the appropriate products at the most favorable prices possible.
Planning a procurement strategy
Following these steps can help to improve a company's bottom line by reducing spending on indirect purchases.
There are several steps, including:
- identifying the need
- researching a supplier
- negotiating the contract, and
- placing the order
Factors to consider
There are several factors to consider to ensure long-term success of an indirect purchasing strategy
- It is essential to align the strategy with the overall business goals and objectives.
- You will need to have a purchase order system in place. This will help you to keep track of what has been ordered and prevent duplication of orders.
- Building solid relationships with suppliers is important, as this will help to negotiate better prices and terms.
- The procurement team must have a good understanding of the company's overall spending patterns and priorities.
- Businesses must carefully consider the quality of products or services they will source indirectly. Indirect purchasing may not be suitable for items that are needed quickly or in small quantities, as a minimum order is often required.
- Finally, it is important to monitor the strategy's performance regularly and make adjustments where necessary.
By considering these factors, the procurement team can develop an effective indirect purchasing strategy that meets the company's needs.