Indirect procurement, what is it and what can it do for my business?

Indirect procurement, you’ve probably heard of it before. But what exactly is this? What does it cover? And what can it mean for your business? Because it can bring multiple benefits by applying this within your organization. Reading this blog will give you answers to all these questions.

What is indirect procurement?

Indirect procurement is any purchase that supports your organization’s core business. This includes costs such as maintenance, energy and a variety of other ancillary costs that are supportive of all core activities. Indirect purchasing is also called NPR, which is short for Non Product Related. Direct purchasing is called BOM, which is an abbreviation for Bill-of-Materials.

The benefits of indirect procurement

Probably optimizing this process is not that high on your list of priorities yet, yet you can save time and money with this. You can save this time by outsourcing indirect procurement. What are the benefits of this?

You probably have all kinds of different suppliers, which ensures that you also have contact with all these different suppliers, these have to send you invoices, but also all have their own payment terms. By outsourcing, all these suppliers are replaced by 1 total supplier. This means that you only have 1 point of contact, 1 invoice and also 1 payment term. Ideal, because this can save you a lot of time and therefore money.
By outsourcing this, indirect purchasing, or NPR, is digitized. This way you have everything digital in 1 system. 1 system for all indirect procurement, this provides more overview.
In this way you have more control over indirect procurement and more time for strategic procurement. By saving time, you keep more time for other items that are high on your agenda. This allows you to manage your time efficiently and purposefully.
By outsourcing indirect procurement, you reduce internal costs and can save up to 21% in costs.

What can it do for my business?

So, outsourcing indirect procurement can benefit your company a lot. It saves you time and money. It makes sense because if you have a large supplier base now, it will be reduced to 1 large buyer. That means 1 invoice, 1 point of contact and 1 payment term. The entire process can be outsourced, from the invoice management to the source-to-pay process. A big advantage is that the TCO is reduced. This is an abbreviation for Total Cost of Ownership. This is the total cost of acquiring and owning a product or service throughout its life cycle.

So, as you just read, it brings many benefits to your organization by outsourcing indirect procurement. This will save you time and money, which can also save you a lot.

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