Want Savings? Stop Ignoring Indirect Spend!

Procurement leaders recently summarized a new study by A.T. Kearny that found that CPOs [are] slow to focus on indirect categories such as IT, Marketing, Professional Services, Facilities Management, and MRO. This is worrying when you consider that not only do some of these categories represent an organization’s biggest savings opportunity, but that indirect spending accounts for up to 50% of spend in many manufacturing organizations, 60% of third-party spend in non-manufacturing companies, and 90% of spend (or more) in the financial services industry.

This is doubly worrying when you consider that:

  • IT savings can be double digits across multiple categories

    10% to 15% on PCs and Laptops is normal; and 20% to 40% on consulting and integration

  • Marketing savings can be 20% to 25%

    and even higher on print spend

  • Legal spend can also be cut by over 20%

    with appropriate AFAs and negotiation

There are ample savings opportunities where indirect spend is concerned, and they can all be uncovered with good visibility and analysis. To find out how, start with the recent Sourcing Innovation Illumination on Strategic Spend Visibility.

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