Procurement’s role is evolving for the better. As they take on more strategic roles within organizations, procurement is challenged with detecting and responding to risks faster to avoid brand damage, scaling suppliers while controlling costs and ensuring suppliers and buyers adopt practices meet or exceed sustainability and CSR initiatives - beyond the demands of regulatory bodies. With price, quality, delivery and sustainability all falling under the purview of procurement, it’s an exciting time for these leaders to make strategic impacts on business, industries and global sustainability efforts. Procurement’s blindside to these efforts though? Indirect spend.
While most procurement leaders focus their risk and CSR monitoring efforts on direct spend categories where their expertise, control and visibility are higher, indirect spend is a growing risk. Today, indirect spend accounts for approximately 27 percent of total spend and it’s only increasing due to more outsourcing and use of contract resources. This will continue to drive more spend into indirect service categories — and increase risk, particularly for sustainability and CSR initiatives.
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