“According to the statistics, no organization could function effectively without Indirect Procurement.”
Direct procurement becomes your utmost priority since you first understand business, its functions, and all the other important aspects of it. It is significant since it has a primary impact on the company’s earnings. However, the relevance of indirect procurement has either been underestimated or regarded as a secondary choice because of very little knowledge or familiarity.
Direct procurement focuses on raw materials and key ingredients, or packaging materials such as plastic, glassware, metal, and other needed products & services that are part of the bill of materials (BOM), which is a key component for firms that generate stockpiles. Non-core procurement, on the other hand, focuses on non-core items that keep the business afloat but aren’t necessarily linked to running the business or commodities, such as IT supplies, storage, shipping, office supplies, marketing, administrative, and personnel management, as well as other components such as annual maintenance contracts and general upkeep, restoration, and administration.
The proportions of these two types of procurements can differ between industries and individual businesses. But, on the other hand, without non-core procurement, the businesses would not be profitable or successful. For example, by concentrating on supply base rationalization, a catering company can save 10% of its overall expense, resulting in a 5% rise in revenues and more flexible operations.
In the same way, businesses rely on direct spending to maximize savings that help in focusing on other important supplies and materials; indirect procurement contributes by strengthening the cash flow structure and creating a comparative differentiation. As an analogy, if direct procurement is an art, Indirect procurement is the painting supplies that complete the art. Let’s consider the example of office supplies. While this seems unnecessary, budgeting the supplies helps reduce at least 10% of the total cost, which can be saved for the future or can be used on core activities. Interesting, isn’t it?
But how important is it to Organizations, and why should it be overlooked?
In an inflationary economy, businesses must trim costs whenever possible to optimize profitability and prosper in the future. And this is what indirect procurement does to a company’s bottom line.
It significantly impacts and aids in successful management by enabling in-depth research and presenting real-time data for better decision-making. It also decreases the potential of experimenting with new suppliers and provides excellent insight into product and service spending.
Why is Indirect Procurement difficult to highlight in a CV?
A curriculum vitae is required when applying for a potential position. It highlights one’s career experiences, accomplishments, and skills. However, candidates often struggle with highlighting indirect procurement in their credentials.
While the advantages of direct purchase are easily illustrated as it significantly influences the company’s potential to boost profits, the other benefits of sourcing non-core commodities are often overlooked or neglected among businesses.
In technical services such as consulting and human resources, for example, focusing on non-core operations such as rationalizing and consolidating procurement bases and monitoring contract enforcement can save up to 10-15% of costs.
The same is true for IT services, where indirect procurement activities like updating volume specifications and renegotiating current contracts can decrease overall costs by 5-20%. And, in light of this, it is clear that direct procurement cannot cut costs without indirect procurement. Many businesses claim that tracking indirect procurement is futile because it is a broad category with hundreds of spend types and thousands of vendors.
However, as time progresses and people become more aware of it, organizations are shifting their resources to it, which means recruiting more employees to perform delegated and other supporting tasks such as data entry, analytical work, outsourcing, etc.
However, the conundrum of what to have on a resume persists. How can you add indirect procurement experience to your CV?
It is always problematic for candidates to demonstrate how precisely they contribute to the company and how they will assist the company in reducing expenditure. Often the description for their function is not given, and even if it is, it does not fully describe it.
So don’t be distressed! You can easily demonstrate how indirect procurement brings value to the curriculum vitae. However, you must summarize your contribution and the efforts you conducted to increase the company’s efficiency or profitability. This is because indirect recruitment is associated with competence and intangible positions rather than a concrete and identified job position.
Assume you are a candidate with a previous job as an Indirect Procurer. Let’s pretend you didn’t personally influence the purchasing decision, but you did persuade consumers to purchase a certain item. Apart from that, you also ensured higher retail productivity by resolving minor problems before escalating them to the line manager. As a result, you can provide a short synopsis of how you actively impacted purchasing decisions in your CV to optimize organization performance.
Another example would be that you previously served as an Indirect Procurement Specialist. You can demonstrate how you used your expertise to render internal stakeholders with procurement recommendations and supervision, as well as insightful perspectives on office equipment and administration. As a result, you could highlight your involvement as an indirect procurement specialist while also explaining how cost-cutting strategies affected the organization.
The individuals who contribute to indirect procurement are as important as the mechanism itself. As a result, add value to your CV by illustrating how your perspective contributes to the company’s growth and profitability. Could Outsourcing be your Best Friend?
No matter how effective one is, they cannot be almost as great at everything as they believe they are. Again, Slack is an excellent example, as it provides many IRC-style features such as live chat rooms grouped by subject, separate groups, and direct messaging.
They recognized the importance of outsourcing sooner and, as a result, outsourced the least important activities. As a result, Slack is now estimated at more than $25 billion, just a few years since it was founded.
Outsourcing can seem unimportant, but it aids in delegating non-core tasks, allowing authority and management to concentrate on more essential operations.
Tutelam is an SCM company that provides P2P Outsourcing services and IT solutions and Non-Core Procurement Outsourcing.
It is a one-stop Procurement Outsourcing Service provider that allows you to concentrate on your core operations while handling indirect spend tasks (Specialising in Procurement Consultancy, P2P Services, and ERP Solution and Support), maximizing profit and performance improvement. Indirect and direct procurement are mutually exclusive. Without one, the other cannot work properly. As a result, it is critical to recognize the professionals who participate in this two-way sourcing process adequately and recognize how valuable they are to the company.