Purchasing renews its focus on the indirect spend

Managing indirect spend is fashionable again! Services are the new black! And, supply management execs are finally getting to dig into spend areas such as marketing, legal, utilities and health benefits. For too long buyers of indirect spend were relegated to cutting purchase orders for office supplies, the tool crib, snow plowing, and processing facilities management invoices. Oh, the progressive ones got involved in IT and travel but those companies that supported buyers working on expensive and important indirect commodities were few and far between.
But things are changing. Fast. The senior manager who attended the roundtable I moderated last week worked primarily for non-manufacturing companies. In their multi-billion companies, spend analysis for any commodity was on the table. That included areas that were formerly off limits to purchasing folks. Once you get behind the HR or marketing doors there is no turning back!
I worked for traditional, albeit high tech, manufacturing companies and we always put our worst people on indirect spend. They had to earn their way into buying products for inventory. Do a good job buying tools for the tool crib one day and you too can buy o-rings and fasteners. That was me 30 something years ago….and I was happy with the promotion. Thankfully, times change.
In many companies lean manufacturing, coupled with some good spend analysis and sourcing, has rung out much of the wasted cost in the manufacturing bill of materials. The savings these days are coming from managing indirect spend…the area where the cool kids are working!