6 min read
Let’s say you’re a procurement leader charged with transforming your team’s impact. You may have a clear plan ahead, like building a framework for operational excellence, choosing the right procurement software, or revising your sourcing strategy.
Yet your biggest challenge—especially if you’re building a procurement function from scratch—likely involves balancing immediate results with laying the foundation for something bigger and more sustainable in indirect procurement.
I want to share the lessons I’ve learned from my decades of experience as a procurement transformation leader and consultant. Here’s how you can build a strategy that delivers a high-impact indirect procurement function.
Indirect procurement in a nutshell
When I say “indirect procurement,” I’m referring to all the goods and services that keep your organization running behind the scenes, from software licenses and marketing agencies to facilities management and office supplies. These purchases support daily operations but don’t make it into your company’s final product or service. Examples include:
- Office supplies
- Software licenses
- Marketing services
- Travel
- MRO (maintenance, repair, and operations)
- Professional services
Although you might consider indirect procurement less critical than direct procurement, effectively managing this spend can yield a strategic impact on your procurement organization. Indirect spend also represents a hidden treasure trove of opportunities if you know where to look. McKinsey has observed that a suite of digitalized solutions in indirect procurement can enable cost savings of up to 15 to 20 percent.
On top of that, indirect procurement often shapes how people perceive procurement as a function. From corporate travel to marketing agencies to IT software, your approach to indirect categories influences the perception of procurement as a trusted partner within the business.
Balancing quick wins with long-term value
Early in my career, I assumed that cost savings alone would prove procurement’s worth. I soon realized that was too simplistic. Stakeholders care about more than cost reduction; they want streamlined processes, fewer hurdles, and faster turnaround times.
Your quick wins are stakeholders’ pain points
If you’re new to indirect procurement leadership—or if you’re stepping into a transformation role—start by listening. Ask your stakeholders, “What’s broken?” They might surprise you with complaints about unclear approvals or slow payment cycles for suppliers.
When you remove these bottlenecks, you position yourself as a pragmatic problem-solver. That early “win” gives you the momentum and trust you need to tackle more strategic initiatives. In my experience, fixing these immediate pain points builds credibility. Once you prove you can solve everyday headaches, stakeholders become more receptive to longer-term projects, such as consolidating spend across categories or pursuing new supplier innovations.
The power of stakeholder alignment
I’ve seen many procurement teams craft sophisticated category strategies in isolation, then watch them fail because they didn’t address the needs of stakeholders. To succeed, you need buy-in from the people who will use (or be affected by) your processes and solutions.
Create Your Strategy with Your Stakeholders, Not for Them
Ask questions like:
- “What does success mean to you?”
- “What business challenges are you trying to solve?”
- “How do you see procurement supporting those goals?”
By focusing on their needs, you anchor your category strategies in real business objectives. This is especially critical for indirect categories, which often involve departments like HR, marketing, R&D, facilities, and IT. Each one has unique needs, so collaboration ensures your approach resonates.
Overcoming skepticism
You may encounter stakeholders who believe they can handle purchases without procurement’s help. Instead of forcing involvement, identify champions—stakeholders who are open to collaborating with you. Deliver measurable success for them first, then showcase those wins. This approach generates goodwill and can persuade more skeptical groups to give procurement a chance.
Supplier relationship Management in indirect categories
Supplier relationship management (SRM) doesn’t apply only to high-stakes, direct material suppliers. Your indirect suppliers also need ongoing attention—although the depth of engagement depends on their spend, risk, and strategic importance.
A common pitfall is focusing solely on sourcing events and vanishing until contract renewal. That gap leads to missed collaboration opportunities and eroded trust, especially if your internal stakeholders end up overseeing the bulk of the supplier relationship without your support.
Consistency is king
Effective SRM hinges on consistency. In good economic times, you might champion innovation and partnership. In a downturn, you might feel pressure to send out a blanket request for 10 percent cost reductions or extended payment terms. However, this flip-flop can alienate suppliers. Over time, suppliers will remember broken promises or abrupt demands. They may become less inclined to offer you their best pricing or prime service when the market rebounds.
Operational excellence and payment timeliness
One simple but powerful aspect of SRM is paying suppliers on time. You might say payment processing isn’t “your job” and belongs to accounts payable. However, your suppliers see your organization as a single entity. When you ensure that invoices get processed properly and payments happen on schedule, you build goodwill. That goodwill paves the way for genuine collaboration on innovation, service enhancements, or strategic initiatives.
The case for streamlined processes
When I work with organizations on procurement transformations, I often start by auditing current buying processes. How long does it take someone to make a simple purchase? Are there multiple systems that fail to communicate with each other? Do employees say they’d rather just “put it on a corporate card” to avoid endless bureaucracy?
Eliminate friction
Procurement should enable, not hinder. If your processes add friction, stakeholders will avoid them whenever possible. That avoidance can lead to rogue spend and undercut procurement’s credibility. By reducing friction, you encourage spend to flow through the right channels, which improves visibility, compliance, and high data quality.
Build a reputation as a ‘customer experience’ leader
Strive for a reputation built on an excellent customer experience. This goal might involve implementing an intuitive e-procurement system, simplifying forms, or training internal customers on best practices. Each positive purchasing experience reinforces procurement’s credibility, making stakeholders more likely to support your strategic ambitions.
How to construct a sustainable operating model
A holistic operating model for indirect procurement can include key elements like:
- Streamlined Procurement Operations
The “engine room” that manages efficient, user-friendly, and data-driven buying processes. - A Category Management Framework
The strategic and mutually agreed upon framework that analyzes spend, market forces, and business needs to create action plans for each category. - Formalized Strategic Sourcing Plans
A disciplined approach to supplier selection and contracting that maximizes value through competitive sourcing events, leveraging market dynamics, and supplier insights. - Standardized Supplier Management Processes
A clearly defined set of processes that ensure ongoing collaboration and continuous improvement across supplier lifecycles while mitigating risk. - A Center of Excellence (CoE)
A hub for tools, templates, analytics, and best practices that supports procurement operations and category management.
A clearly defined operating model helps your organization grasp who handles what, reducing confusion and encouraging accountability. It also scales more effectively when your responsibilities expand or when you take on additional categories.
The role of technology
Let’s address the elephant in the room: procurement technology. Procurement orchestration software, spend analytics tools, and spend management suites are all enablers—but they’re not magic bullets. Your processes and stakeholder relationships must be well-defined before technology can truly shine. Focus on cleaning up data, mapping processes, and training people. Then, choose a technology stack that aligns with your vision, rather than forcing your strategy around a particular tool.
Avoiding common pitfalls
Over the years, I’ve seen procurement teams stumble into a few recurring pitfalls:
- Overemphasizing Cost Savings
Saving money is crucial, but if it becomes your only story, you risk losing the broader strategic value of indirect procurement. - Ignoring ‘Small’ Suppliers
Sometimes your most innovative or responsive partners are smaller niche providers. Don’t neglect them just because they aren’t large revenue generators (yet). - Inconsistent Messaging to Suppliers
Flip-flopping between “we value your partnership” and “we need an across-the-board 10 percent discount” can permanently damage trust. - Underestimating Change Management
Rolling out new processes or policies without a structured change management approach typically leads to stakeholder confusion or revolt.
Set your path forward
If there’s one message I want you to remember, it’s this: success in indirect procurement is not about you—it’s about solving the problems your stakeholders and suppliers face on a daily basis. Yes, cost savings matter. But if your internal customers are frustrated by convoluted buying processes, or your suppliers feel undervalued, you risk undermining the very results you’re trying to achieve.
Here’s a quick roadmap to guide your efforts:
- Listen First: Survey or interview internal stakeholders to pinpoint the biggest pain points.
- Tackle Low-Hanging Fruit: Fix the obvious process inefficiencies. This establishes your credibility.
- Engage Stakeholders in Strategy: Co-develop solutions so stakeholders feel ownership and commitment.
- Develop a Supplier Management Framework: Include guidelines for consistent communication, performance reviews, and innovation discussions.
- Champion Operational Excellence: Look after the basics like paying suppliers on time and providing clear instructions.
- Scale Up Strategically: Once you’ve proven your value, broaden your remit to other indirect categories and more advanced initiatives like supplier collaboration and risk management.
Bottom line on indirect procurement strategies
We’re operating in a complex, fast-changing business environment where every department is under pressure to deliver more with less. As the leader of indirect procurement, you have a unique opportunity to unify the organization around more efficient, value-driven approaches to spending—whether that’s a marketing agency partnership, travel program, or facility services contract.
Start by solving real problems for your stakeholders, manage your supplier relationships with consistency and respect, and lay the foundation for strategic impact by building a robust operating model. If you stay true to these principles, you’ll transform your indirect procurement function from a cost center to a business enabler.
I hope this perspective helps you and your team on your journey. At Art of Procurement, we’re passionate about unlocking the full potential of procurement—both direct and indirect. Join procurement leaders from over 6,000 companies and subscribe to our weekly newsletters.
Related resources and articles
- A Conversation with the Authors of ‘Managing Indirect Spend’
- Taking a BOLD and Focused Approach to Transforming Indirect P2P at Clorox
- A Fresh Take on the Future of Procurement with The Hershey Company’s Sherry Ulsh
- How CPO’s and Academia Combined to Set the Indirect Procurement Standard
