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Mastering Indirect Spend: 5 Keys to Success – Supply Chain Today

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Mastering Indirect Spend: 5 Keys to Success

Indirect spend refers to the money that a company spends on goods and services that are not directly related to its core business operations. This can include items such as office supplies, travel expenses, and professional services. Mastering indirect spend in procurement involves implementing strategies and processes to effectively manage and optimize these expenditures. Here are some steps that companies can take to achieve this:

  1. Identify and classify indirect spend: The first step in managing indirect spend is to identify and classify all indirect expenditures. This will allow you to understand the types of goods and services that are being purchased and the departments or business units that are making these purchases.
  2. Implement a procurement process: Establishing a formal procurement process can help ensure that indirect purchases are made in a consistent and controlled manner. This can include setting up a system for requisitioning and approving purchases, as well as establishing preferred vendors and negotiated pricing agreements.
  3. Leverage technology: There are a variety of tools and technologies that can help companies manage and optimize indirect spend. This can include purchasing and expense management software, as well as e-sourcing platforms that allow companies to solicit bids from multiple suppliers.
  4. Monitor and analyze spend: Regularly monitoring and analyzing indirect spend can help identify opportunities for cost savings. This can include analyzing spending patterns to identify areas of overspend, as well as implementing cost-saving initiatives, such as consolidating vendors or negotiating better pricing.

By implementing these strategies, companies can effectively manage and optimize their indirect spend, leading to cost savings and improved efficiency.

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Negotiation Quotes

  • “Let us never negotiate out of fear. But let us never fear to negotiate.”  ~John F. Kennedy
  • “We tend to think that, in a traditional organisation, people are producing results because management wants results, but the essence of a high-quality organisation is people producing results because they want the results. It’s puzzling we find that hard to understand, that if people are really enjoying, they’ll innovate, they’ll take risks, they’ll have trust with one another because they are really committed to what they’re doing and it’s fun” ~ Peter Senge
  • “A true leader has the confidence to stand alone, the courage to make tough decisions, and the compassion to listen to the needs of others. He does not set out to be a leader, but becomes one by the equality of his actions and the integrity of his intent.” ~ Douglas MacArthur
  • “One cannot negotiate under fire.” ~ Ariel Sharon
  • “One of the best ways to persuade others is by listening to them.”  ~ Dean Rusk
  • “I want women to get paid more. I want to teach them to negotiate so they get paid more.” ~ Sheryl Sandberg
  • “Focus on the lowest total cost of ownership, not the lowest price.” ~EverythingSupplyChain.com
  • “You must never try to make all the money that’s in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won’t have many deals.” ~ J. Paul Getty
  • “Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” ~ Sun Tzu
  • “If you are planning on doing business with someone again, don’t be too tough in the negotiations. If you’re going to skin a cat, don’t keep it as a house cat.” ~ Marvin Levin

indirect spend

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