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 suppliers to manage, achieving these savings is no small task for indirect buyers. In addition, they must eliminate unscheduled purchases throughout their company and strengthen relationships with their stakeholders. To better understand their role, this two-part post summarises indirect buyers' objectives, strategies and skills.
Renewed interest in indirect procurement
Indirect procurement is now becoming a strategic asset for companies after having been a long-neglected aspect of production procurement. Managing expenditure 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 are reorganising their procurement departments. Almost three quarters of all companies now have a dedicated indirect procurement department. This figure has increased from 61% in 2017 and 44% in 2016 respectively. However, the importance attributed to indirect procurement varies greatly. Although a number of companies still consider this category to be low-priority, 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.
The objectives of indirect buyers
The indirect buyer position encompasses many roles, combining five main objectives that are all inherent to procurement, but all require a different strategy:
- Reducing costs: As saving money is central to the role, indirect buyers prioritise optimising the Total Cost of Ownership of their purchases, this ensuring that contracts are executed successfully and eliminating unscheduled purchases.
- Promoting innovation and business transformation: Digitalising 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 of over spending. However, they must also support procurement departments in adopting these tools. As their role involves monitoring and advising on new solutions that meet the needs of their internal customers, indirect buyers must also be on the lookout for innovation opportunities. Supplier connections are a particularly good source of such solutions.
- Cultivating a complete network: Indirect buyers must position themselves as key partners for their stakeholders. They must involve and engage internal customers, whilst also developing their supplier relationships with the aim of establishing a long-term partnership. In addition, user satisfaction and supplier relationships are also key performance criteria1.
- Contributing to CSR: Corporate Social Responsibility is becoming a differentiating factor in all aspects of business, both for customers and partners. Indirect buyers therefore have a key role to play in implementing CSR, particularly in terms of promoting locally manufactured products, in addition to employment and equal opportunities. They can do this by integrating certain criteria into their procurement policy and aligning these criteria with their business objectives.
- Managing risks: Indirect buyers must adapt to an increasingly strict regulatory environment. Let's not forget either that supplier risks are even greater when managing a large portfolio and numerous transactions. To manage these risks, indirect buyers must work closely with the legal department and monitor supplier risks throughout the term of the contract.
Collaboration is an integral part of the role as indirect buyers interact with an expansive network, including business departments, general management and suppliers. It is no coincidence that indirect buyers are now nicknamed "business partners".
- Available online soon: The second part of this post will focus on the skills of indirect buyers.
 Acxias et Ressource Consulting