Over the last few years, indirect procurement departments have played a crucial role in large companies. The field is undergoing significant changes, with companies increasingly recognising the potential savings that can be made through these often-undervalued non-strategic purchases. However, with a growing number of categories and supply chain to manage, achieving these savings is no small task for indirect buyers. The role of this purchasing professional is to stamp out rogue spending throughout the company and to strengthen its links with its many stakeholders. To better understand the role of the indirect buyer, this job description summarises their objectives, strategies, and skills.
What is indirect procurement?
Indirect procurement plays a key role in the smooth running of companies. It may involve products, supplies or consumables that are essential for business operations. These types of purchases differ from direct purchases, known as “production” or “strategic” purchases.
A long-neglected aspect, indirect procurement has now taken on a strategic role. Managing expenses and reducing indirect costs relating to this procurement category are key strategies in improving margins and adapting a company’s cost structure to the business climate.
With this in mind, companies have begun to reorganise their procurement departments. However, the importance attributed to indirect procurement varies greatly. Although still considered low priority in some cases, it is increasingly becoming the focus of optimisation measures, with some companies even following the same approaches for this category as they do for strategic procurement.
What are the objectives of indirect buyers?
The indirect buyer position encompasses many roles, combining five main objectives that are all inherent to procurement, but require a specific strategy:
Reducing costs
As saving money is central to the role, indirect buyers focus in particular on the Total Cost of Ownership of their purchases, on ensuring that contracts are properly executed and on eliminating rogue spending.
Promoting innovation and business transformation
Digitising the field and its processes is a top priority. Using an effective e-procurement solution enables indirect buyers to overcome some of the difficulties they face, such as having too large a management load or a lack of visibility over expenditure. However, they must also support the chief procurement officer in adopting these tools. Indirect buyers also play the role of drivers of innovation, particularly through their supplier relationships. They monitor and advise on innovative solutions to meet the needs of their internal customers.
Cultivating an effective network
Indirect buyers must position themselves as key partners for their stakeholders. They need to involve and engage internal customers, while developing their supplier relationships with the aim of establishing long-term partnerships.
Contributing to CSR
Corporate Social Responsibility has become a key differentiator in all aspects of business, for customers and partners alike. Indirect buyers therefore have a key role to play, particularly at European level through Made in Europe. This smaller-scale commitment lowers costs while promoting employment and the economy at the local level. One of their objectives is therefore to integrate certain CSR criteria into their procurement policy and to align these criteria with the business objectives.
Managing risks
Indirect buyers must adapt to an increasingly restrictive regulatory environment. Supplier risks are all the more acute when managing a large portfolio and numerous transactions. To manage these risks, indirect buyers must work closely with the legal department and remain vigilant about supplier risks throughout the term of the contract.
Collaboration is an integral part of the role, as indirect buyers interact with a large network, including business departments, general management, and suppliers. It is no coincidence that indirect buyers are now nicknamed “business partners”!
How do you become an indirect buyer?
Indirect procurement teams manage a multitude of product categories, suppliers, and internal customers. This is also one of the main characteristics that distinguish this function from strategic purchasing: it interacts with a large number of stakeholders. While certain skills remain inherent to the world of procurement (negotiation, for example), indirect buyers must develop specific know-how and interpersonal skills to succeed in their objectives.
Studies for recruitment to an indirect buyer position
Before applying for job vacancies for an indirect buyer position, candidates have usually studied at business school. During the recruitment phase, they can refer to their knowledge of indirect procurement management acquired during projects. Experience in business as a self-taught production buyer can also be advantageous in helping to secure the job and negotiating the salary.
Know-how: strengths and weaknesses
At the ProcureCon Indirect Europe in 2019, indirect buyers took stock of their skills. While they felt they had mastered the logistics and management of their product categories and their suppliers, they nevertheless felt they had room for improvement in stakeholder management as well as in sustainable and responsible procurement. As for risk management, the results were ambiguous, most likely because the regulatory environment and risks are constantly changing, requiring constant vigilance.
Interpersonal skills: the essentials
Interpersonal skills, at the intersection between emotional and social intelligence, are undoubtedly the prerequisites of the indirect purchasing function, along with three key words.
1. Knowledge
Francis Bacon said that knowledge itself is power.
This quote applies perfectly to the world of procurement. In order to meet the needs of their internal customers, indirect buyers must have an in-depth knowledge of their company, business departments, employees and their needs, and more besides. To bring added value, they must also be attentive to their environment, suppliers, and innovations to create opportunities. Their relationship with employees is developed over time to improve the effectiveness of their actions.
Behavioural qualities: curiosity and adaptability
2. Communication
To forge links with their stakeholders, indirect buyers must be able to translate the key information they hold (expenses, risks, etc.) into language that is accessible and easily understood by all. The challenge is that they deal with a wide variety of partners: users and decision-makers, from different cultures and hierarchical levels!
Behavioural qualities: active listening, empathy, and transparency
3. Collaboration
Listening, discussing, and reflecting with stakeholders is essential for building relationships of trust, obtaining the support of your network and thus creating value. Just try changing the IT media or software that’s widely used in the company (such as the email system) without consulting the IT teams or even the end users! Such an approach would be doomed to failure.
Behavioural qualities: people skills, leadership, diplomacy, and teaching
These soft skills are increasingly becoming an integral part of training programmes. Gordon Crichton, Director of MAI (Management of International Purchasing and Innovation) agrees: “Insofar as the procurement function is increasingly integrated upstream to form part of the “big picture” alongside R&D or marketing, the development of relational skills is the key to the success of projects.
Acting as a kind of mediator and influencer in their network, indirect buyers are becoming real “business partners”. As Nathalie Merminod, Senior Lecturer at the IAE (Institut d’Administration des Entreprises) in Grenoble, reminds us in her article New roles and skills profiles of buyers: “The success or even the performance of procurement depends on its ability to manage relationships”. In indirect purchasing, the time has come to collaborate!
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