Remember our strategy for becoming a two-cookie company by maximizing your spend? Let’s shift perspective and pretend that you own the bakery and are looking to cut down on your spending. When looking at your expenses, you can separate your costs into two buckets. The first is what it takes to keep the day-to-day business alive such as the bills, kitchen supplies, cleaning supplies, etc. The second bucket is what is required to produce the goods such as purchasing the ingredients in bulk from a third party. While you often can’t control third party prices, you can still have a say in your indirect spend.
Bakery or not, the same principals apply to any business. You have direct and indirect spending. Indirect spending is the act of purchasing services or supplies required to keep the day-to-day business alive, while direct spending refers to the third party that is meant for production of the organization's products and or services. To learn more about the differences in direct and indirect procurement, Procurement Sense published this great article that dives deeper into their differences.
Challenges for Independent Companies
The problem with indirect spending is that although the needs are consistent, the means by which you procure them vary. Here are a few of the challenges that stand in a company’s way of getting the lowest pricing available for their day-to-day needs.
- A smaller average spend- Purchasing volume for a small to mid-sized company can be lower, meaning the procurement lacks leverage in the negotiation process with vendors.
- Lower relational capacity- Building fruitful relationships with a large number of big suppliers is a time drain for companies that have limited resources.
- Difficult to evaluate- Indirect spend often cannot be anticipated or captured, making it hard, if not impossible, to account for and accurately budget.
Indirect Procurement Strategy Solutions
Entering into a procurement partnership transfers these issues to a party with not only expanded capacity and connections but expertise in collective buying. Their pre-existing relationship and programs with suppliers not only save you money but the time that would be spent trying to negotiate on behalf of your company.
By taking your purchasing needs for day-to-day operations and combining them with the purchasing orders of thousands of other companies, we can secure negotiated discounts with the top suppliers in the country. Approaching vendors with a high committed volume allows us to offer you the lowest available pricing on top quality contracts.
The suppliers we have contracts with are amongst the highest ranked in the country in both quality and price. Our supplier marketplace includes vendors such as Staples, FedEx, US Foods, Hotel Engine, and more. Check out all our incredible vendors to see the breadth of our available programs and how they could benefit you.
- FedEx- Small package shipping for a business can get pricey, but with our FedEx program you can save on your day-to-day shipping needs. Our members get some of the lowest shipping rates available on air, ground, exporting and freight – including domestic and international services – and a host of value-added benefits and savings.
- Staples- Every company has supply needs. With our Staples Program, members get discounts not only on office supplies but also on janitorial supplies, furniture, office equipment and managed services.
All these programs and more are available to help reduce your indirect procurement spend for no cost and no commitment. Read about how we can offer contracts at such low cost with no commitment here and sign up today. We look forward to partnering with you!