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Why businesses struggle with indirect procurement

Proxima
Mar 6, 2012 2:51:00 PM

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This whitepaper, the second in a series of three, examines why many businesses fail to drive maximum benefits and efficiencies out of their indirect expenditure.

Proxima, in conjunction with NelsonHall, ran a research study (involving 120 FTSE 100 CFOs and CPOs from UK, Europe and North America) to investigate the perceptions, attitudes and desired outcomes of Indirect Procurement to catalyse a common sense that procurement could and should play a greater role in most businesses.

Some of the responses in our study do indicate that indirect procurement in some organisations is perceived to have a role that is somewhat tactical and administrative. Some respondents advised that it can create process blocks and can, on occasion, even be antagonistic to specialist suppliers of the business, particularly specialist service providers. 

Our first whitepaper, in this series of three, closely examined the quantitative research data surrounding the current perceptions of the indirect procurement function. This whitepaper examines the qualitative data gathered throughout the research and explores why many businesses fail to drive maximum benefits out of their indirect spend and recommendations for effectively managing indirect costs.

Highlights from this paper:

  • 57% of CFOs expressed low levels of satisfaction with the cost effectiveness of the indirect procurement function
  • 58% of CFOs expressed low satisfaction with the proportion of indirect spend under management
  • Indirect procurement at a strategic level is political not tactical

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