Indirect Procurement - Definition, How to Do and What to Do

Topics: Supply chain management, Management, Procurement Pages: 3 (569 words) Published: March 8, 2013
Indirect procurement
From Wikipedia, the free encyclopedia
Indirect Procurement is the sourcing of all goods and services for a business that enable its activity. Or looking at it another way, the goods and services classified under the umbrella of indirect procurement are commonly bought for consumption by internal stakeholders (business units or functions) rather than the external customer or client. Indirect Procurement categories include: * Marketing related services (media buying, agencies)

* Professional Services (consultants, advisors)
* Travel Management
* IT related services (hardware, software)
* HR related services (recruitment agencies, training)
* Facilities Management and office services (Telecoms, furniture, cleaning, catering, printers) * Utilities (gas, electricity, water)

The overarching classification of ‘Indirects’ can vary from business to business and increasingly the distinction between what is a ‘Direct’ cost and an ‘Indirect’ cost can become blurred when looking at such expenditure items as Fleet and Transportation. -------------------------------------------------

Organisations with a clear definition of ‘Direct’ Procurement (often called Goods for Resale, primary procurement, common goods procurement or core procurement) have spent decades engineering their primary supply chain – ensuring: * Goods for resale (GFR) margin is at or above industry standard * Risk is kept to a minimum

* Long term supply has been assured with preferred suppliers * Relationships have been built and developed over time
* Processes have been engrained into the core business
* Senior executives and Board members acknowledge the value of the supply chain in light of business objectives.

'Indirect’ procurement (often called Goods Not for Resale, non-core procurement, non-common procurement or enabling spend), compared side-by-side with direct...
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