CFO Insights: Targeting Procurement: Why CFOs Should Take Direct Aim at Indirect Spend
“Historically, CFOs and CPOs have focused on improving sourcing by consolidating the base of their biggest-dollar suppliers, allocating their best resources toward high-value contracts for direct materials categories, such as raw materials or finished goods, that directly contribute to driving growth, profitability, and competitive advantage. But not to be overlooked is the potential of maximizing the value in the less-visible indirect categories, such as travel, logistics, and information technology, as well as maintenance, repair, and operations. Even large-scale construction and capital projects contain great potential for the more efficient allocation of funds. Such indirect goods and services can run on the order of 10% of revenue in some industries, and even more in others.”