The fourth annual survey on indirect procurement, conducted in collaboration with the Indirect Purchasing & Digital Meet-up event, has recently been published*. The survey analyses the management of indirect procurement and the challenges posed by this category in detail.
Indirect procurement: What type of organisational structure is used?
It seems that procurement departments are being restructured in order to process indirect purchases separately to other types of procurement. In fact, according to the survey, 73% of companies will have a separate indirect procurement department from now on. Even though this figure seems to have been distorted by the topic of the survey, it still highlights a growing phenomenon (+ 12 points compared to 2017 and + 29 points compared to 2016).
The importance awarded to this procurement category differs greatly according to the companies surveyed. While indirect procurement is a priority for 31% of respondents (to the extent that they adopt similar methods to those used for strategic procurement), 25% simply view indirect procurement as the focus of recent efforts. Meanwhile, 17% do not consider it a priority.
Indirect procurement: What problems does it pose?
Within indirect procurement, some categories take precedence over others. Most significant are IT and communications systems, vehicle fleets and capital expenditure (CapEx). However, buyers within the company do not always have the most influence over the procurement categories, as some business departments still prefer to maintain control over their purchases.
The three performance criteria are as you would expect: quality of products or services, satisfaction of internal customers and expected savings. The quality of supplier relations has dropped two places compared to last year and therefore is no longer included in the top three.
At the same time, indirect buyers are facing new issues, of which the main concern is the fragmentation and size of their supplier base. This is followed by control over certain product categories and the importance of rogue purchases. These last two points highlight the need to provide further guidance for internal customers and demonstrate the ways in which procurement can benefit them.
Indirect procurement: What stage has it reached in terms of digital maturity?
54% of procurement departments still manage direct and indirect purchases separately within their IT system. When taking a closer look at digital solutions, the most popular seem to be those dedicated to travel and transport solutions, in addition to e-procurement and e-sourcing.
However, these solutions are still poorly utilised, with 46% of respondents saying that they rarely use the solutions available to them, if at all. Though digitalisation is underway, there is still a lot of progress to be made!
Although indirect procurement has the potential to boost company performance, it is still rarely addressed within many companies. To learn more about the trends surrounding this procurement category, we recommend that you take a look at the survey results in detail.
*Survey of 85 procurement professionals from July to September 2018