Procurement takes an array of different forms, and each form has a distinct impact on the organization. For example, sourcing materials for manufacturing your products is one form of procurement while sourcing goods and services for internal use is another. Learn about indirect procurement, how to use it effectively and how it can affect your business.
Intro to Indirect Procurement
Whereas other areas of procurement relate to sourcing materials for production, indirect procurement is associated with goods and services that are consumed by the organization itself. As you might have guessed, the procurement process has some key differences from those of other procurement activities.
Sourcing goods and materials that are to be consumed directly by your organization internally is just as important as procuring material for production. You still need to find the best deals for the best quality, a task that can be quite difficult for the uninitiated.
Once you’ve been around the block, you’ll readily understand that the most efficient and cost-effective way to go about it is by using specialized procurement software.
The material sourced through indirect procurement is typically consumed by internal stakeholders. These materials keep the day-to-day operations of your business going. Whether it’s staples, printing paper, or coffee, it’s all essential to keeping the gears turning and making money every day.
Fundamentals of Procurement Practices
Many companies focus primarily on making more money when it comes to procurement, meaning that they are primarily interested in procurement’s potential to help them earn more. This focus, however, is much too narrow to be of much actual use as there are other vital focus areas in procurement that can affect the business and its operations as a whole.
As a manager or business owner, you have to look at the big picture. Procurement, especially indirect procurement, has a variety of wide-ranging effects that can make your organization either more or less productive or efficient. For example, when considering indirect procurement, you need to look at your internal sustainability and see what aspects can be improved at the procurement level. Most of the time internal sustainability can be greatly improved by using procurement software that can automate essential tasks, find the best suppliers, and keep everything running smoothly.
Also, look into the advantages of reverse auctioning as it relates to indirect procurement. The same principles that apply to reverse auctioning to drive down supplier prices works with indirect procurement as well. If you’re already using reverse auctioning to get the best deals on production materials, you easily get the same savings on internal supplies. Similar to other procurement tasks, reverse auctioning delivers the best results when you use special procurement software from trusted industry leaders like ProcurePort.
Indirect Procurement Spend
Another term you should familiarize yourself with is indirect procurement spend which refers to the sourcing of all peripheral goods and services. This relates primarily to anything the business purchases to continue operations that are not used when making the final product. ProcurePort has a highly respected and informative whitepaper on spend analysis where you can learn more.
The Advantages of Procurement Software
Automation isn’t the future anymore, it’s the present, meaning that it’s becoming imperative for businesses to get on board with automation today or risk falling behind more progressive competitors. While automation has quickly overtaken areas like manufacturing and customer service, indirect procurement tasks are yet another frontier for it to seize.
Don’t resist, go along with it, your profits will rise and your savings will benefit tremendously. By using procurement software to handle these tasks, you will have more reliable and actionable information as well as enjoy incredible savings with each supplier.
Make Indirect Procurement Easy with ProcurePort
ProcurePort is the first choice for countless organizations for a reason, you can depend on us to give you the best in savings and convenience. When it comes to indirect or any other type of procurement, you can’t beat ProcurePort’s superior software solutions. We’ve been saving companies money and helping them source the goods and services they need for Get the help you need from ProcurePort, the premier destination for all of your procurement solutions.
