On average, indirect spend represents nearly 50 percent of an enterprise company’s purchases. Research has found that indirect procurement is unambiguously different from direct procurement in that it has smaller average supplier expenditures, more suppliers, more maverick spend and a more complex stakeholder environment than directs.

Indirect spend may not contribute directly to the product or service produced by a company, but it is necessary for a business to function. From marketing and advertising to digital document storage, HVAC maintenance and utilities, indirect expenses typically stay behind the scenes. However, it isn't always clear which expenses are direct and indirect, and some may be a mix of both.

We have found that indirect spend challenges are not category specific. In fact, most indirect categories are often characterized by nebulous contract terms, multiple pricing methodologies, and high volume transactions that make a program incredibly difficult to manage.

In addition, indirect spend categories are often spread throughout an organization, making classifying and tracking more complex. Compiling indirect spend data from across your entire organization can reveal inefficiencies and opportunities for savings. For example, consolidating your operation's travel or tech support services could help your business run more effectively and increase your bottom line at the same time.

At Dryden Group, our procurement consulting team maintains an extensive database of vendor records and indirect spend statistics. Our commodity experts will help your leadership develop a long-term approach to indirect spend and benchmarking so that your business can deploy its resources into developing better products and stronger services.