If your indirect spend is flying under the radar, you're not alone, and it’s costing more than you think. 

Indirect category management is often overlooked, yet it accounts for up to 40% of a company's total spend and hides numerous inefficiencies. Dispersed suppliers, maverick purchasing, and a lack of strategy drain resources and slow growth. 

The good news is that a structured, tech-enabled approach to indirect category management can help you regain control, optimize supplier relationships, and deliver measurable savings. 

In this article, we’ll unpack proven best practices and smart strategies to help you turn indirect spend into a strategic advantage, without adding complexity.

What Is Indirect Category Management?

Indirect category management is the strategic process of organizing, managing, and optimizing the procurement of non-core goods and services, also known as indirect spend. 

These include everything from office supplies and marketing services to software subscriptions and facilities management, as well as travel expenses. While indirect categories may not directly contribute to your end product, they significantly impact your company's operational efficiency, cost structure, and overall financial performance.

Unlike direct procurement, where supplier relationships and materials are closely tied to production, indirect spend is often dispersed across various departments. Category Management helps you consolidate this spend, identify savings opportunities, align stakeholders, and bring consistency to supplier decisions.

By grouping similar purchases into defined categories and applying a strategic lens, you can unlock hidden efficiencies, improve compliance, and drive more value from your supplier base. The right approach ensures that you're not just buying what you need, but buying it smarter, faster, and more cost-effectively.

That’s exactly why indirect spend demands closer attention; it’s often underestimated, yet full of untapped potential.

Also read Category Management in Procurement: Strategy and Benefits

Why Indirect Spend Demands Attention

Indirect spend may not be tied directly to your product or service delivery, but it represents a significant portion of your company’s total expenses. Left unmanaged, it leads to inefficiencies, higher costs, and compliance risks that impact your bottom line.

Here’s why you need to take indirect category management seriously:

• It adds up quickly: Indirect spend often accounts for 40% of total business expenses, encompassing categories such as IT, travel, office supplies, and professional services.
• It’s often decentralized, with multiple departments managing purchases independently, resulting in inconsistent pricing, limited visibility, and poor contract compliance.
• It incurs hidden costs: duplicate suppliers, unmanaged subscriptions, and non-standardized processes can inflate operational costs over time.
• It increases risk exposure: Without a clear procurement process, you face higher chances of non-compliance, data security issues, and service disruptions.
• It limits negotiating power: Fragmented spend makes it harder to leverage volume discounts or strategic supplier partnerships.
• It reduces operational efficiency: Disconnected procurement efforts waste time and resources that could be allocated to high-value, strategic tasks.
• It leaves money on the table: Companies that fail to manage indirect spend effectively may miss out on potential savings of 15% to 25% per transaction, as seen in organizations that have implemented procure-to-pay (P2P) systems and streamlined their purchasing cycles.

To get control over these challenges, let’s explore the four pillars of effective indirect category management.

Four Pillars of Effective Indirect Category Management

Managing indirect spend effectively starts with a strong foundation, and that’s where the four key pillars of indirect category management come into play. 

These pillars guide how you structure your procurement efforts, engage stakeholders, and deliver measurable impact across the organization.

Here’s what to focus on:

1. Spend Visibility

You can’t manage what you can’t see. Gaining full visibility into your indirect spend is essential for identifying savings opportunities, tracking compliance, and eliminating waste. Use centralized procurement platforms, real-time dashboards, and spend analytics to map where your money is going and why.

2. Category Segmentation

Group similar products and services into strategic categories to manage them more effectively. This helps you tailor sourcing strategies, consolidate suppliers, and apply category-specific benchmarks. Segmentation also makes it easier to identify areas with high savings potential or procurement risk.

3. Stakeholder Alignment

Indirect procurement often involves multiple departments, each with its own needs and goals. Aligning internal stakeholders early in the category planning process ensures buy-in, reduces resistance to change, and improves compliance. Collaboration across finance, IT, marketing, and other departments is crucial for driving consistency and achieving results.

4. Supplier Relationship Management

Strategic supplier partnerships lead to better service, pricing, and innovation. Focus on building long-term relationships with trusted suppliers, tracking performance through KPIs, and engaging in regular reviews. This helps reduce risk and unlock greater value beyond just cost savings.
Now that you’ve built a solid foundation, let’s look at the top strategies to manage indirect categories more effectively.

Top Indirect Category Strategies

Once you’ve established the core pillars of indirect category management, it’s time to put them into action with proven strategies that drive results. The goal is to reduce complexity, control costs, and unlock long-term value, without slowing down your teams.

Here are the top strategies to manage indirect categories more effectively:

1. Consolidate Suppliers

Streamline your supplier base by consolidating purchases with preferred vendors. This enhances your negotiation power, reduces administrative overhead, and often results in better pricing and service levels.

Also read What is Supplier Sourcing? A Guide to Smarter Supply Decisions

2. Implement Tailored Category Plans

Each indirect category has its nuances. Develop category-specific sourcing strategies that reflect the market landscape, internal demand, and the capabilities of suppliers. 

For example, your strategy for IT services should differ from that for office supplies or travel.

3. Leverage Digital Procurement Tools

Use AI-powered platforms, e-sourcing tools, and automated workflows to centralize spend data, track supplier performance, and drive consistency. These tools enhance visibility, expedite approvals, and minimize errors throughout the procurement cycle.

4. Collaborate Cross-Functionally

Indirect categories touch multiple departments. Align procurement with stakeholders in finance, HR, and operations to ensure strategies meet both functional needs and business goals.

5. Standardize Policies and Processes

Develop clear procurement policies, contract templates, and sourcing guidelines to reduce maverick spend and ensure compliance. Standardization also supports scalability as your organization grows.

6. Monitor Market Trends and Benchmarking

Stay informed on category-specific market shifts, pricing benchmarks, and supplier performance metrics. This helps you make more informed sourcing decisions and adjust your strategies in real-time.

To track the effectiveness of these strategies, let’s examine the key performance indicators (KPIs) that should be measured.

Key Procurement KPIs to Measure Indirect Category Management Success

Tracking the right key performance indicators (KPIs) is crucial to determining whether your indirect category strategies are effective. Without metrics, it’s difficult to prove value, optimize your efforts, or identify areas for improvement. KPIs help you stay accountable, drive continuous improvement, and align procurement with business goals.

Here are the most important procurement KPIs to track for indirect category management:

1. Cost Savings Achieved: Measure both hard savings (e.g., negotiated discounts) and soft savings (e.g., process improvements). This KPI directly reflects the financial impact of your sourcing strategies.
2. Compliance Rate: Monitor the frequency with which departments adhere to preferred supplier lists, procurement policies, and contract terms. Higher compliance means fewer rogue purchases and better cost control.
3. Supplier Performance Score: Use scorecards to evaluate supplier reliability, quality, and delivery timelines. Monitoring this ensures you’re getting the best value from your vendor relationships.
4. Purchase Order (PO) Cycle Time: Measure the time elapsed from the requisition to the approval of the order. Shorter cycles indicate a more efficient procurement process and less internal friction.
5. Percentage of Maverick Spend: This indicates the amount of spend that occurs outside of approved procurement channels. A lower percentage signals stronger process discipline and better spend control.
6. Savings Forecast Accuracy: Compare expected vs. actual savings from procurement initiatives. Accurate forecasts reflect a strong understanding of spend data and supplier behavior.
7. Category Strategy Adoption Rate: Track the consistency with which internal teams adopt and implement category plans. High adoption indicates stakeholder alignment and confidence in procurement’s strategic role.

To consistently achieve these KPIs, you must invest in developing the internal capabilities that drive strategic, data-informed procurement decisions.

How to Build Internal Capability for Indirect Category Management Excellence

Strong technology can support your strategy, but it's your people and processes that make it succeed. Building internal capability is essential for scaling indirect category management and driving long-term value. When your team understands the strategic importance of indirect spend and possesses the necessary skills and structures to manage it effectively, you foster a culture of continuous improvement and accountability.

Here’s how to build lasting internal capability:

1. Upskill Procurement Teams: Invest in training that sharpens analytical skills, market research capabilities, and supplier negotiation tactics. Equip your team to manage complex indirect categories with confidence.

2. Establish Cross-Functional Collaboration: Indirect spend touches every department. Create steering committees or sourcing councils that include finance, HR, IT, and operations to align sourcing priorities with business needs.

3. Develop Clear Governance Structures: Define roles, responsibilities, and approval workflows for managing indirect spend. Clear governance ensures consistency, compliance, and better decision-making.

4. Promote Category Ownership: Assign category leads responsible for strategy, supplier performance, and results. Giving ownership boosts accountability and fosters a deeper understanding of the category landscape.

5. Foster a Data-Driven Culture: Empower your teams to leverage spend data and market intelligence in their everyday decisions. A data-driven mindset leads to better forecasting, risk management, and supplier performance tracking.

With your team and processes in place, it’s time to explore the technology enablers that bring your indirect category management strategy to life.

Top Technology Enablers for Smarter Indirect Category Management

To manage indirect categories effectively, you need more than just strategy; you need the right technology. Digital tools don’t just streamline procurement; they unlock insights, automate manual tasks, and help you scale category management across the business. 

When implemented thoughtfully, technology enables faster decision-making, better collaboration, and stronger supplier relationships.

Here are the key technology enablers that support indirect category management:

1. Spend Analytics Platforms

Gain real-time visibility into your indirect spend by consolidating data from multiple systems. Spend analytics tools help you spot patterns, identify savings opportunities, and benchmark supplier performance.

2. E-Sourcing and RFX Tools

Streamline sourcing events, such as RFQs, RFPs, and auctions. These platforms enhance supplier engagement, expedite evaluations, and facilitate more competitive bids.

3. Contract Lifecycle Management (CLM)

Centralize and automate contract creation, approval, and monitoring. CLM systems help you manage risk, ensure compliance, and avoid costly contract lapses or renewals.

4. Procure-to-Pay (P2P) Solutions

End-to-end P2P platforms automate the entire process, from requisition to payment, reducing cycle times and enhancing control over indirect purchases.

5. Supplier Relationship Management (SRM) Tools

These tools enable you to monitor supplier performance, manage risk, and foster strategic partnerships. You can track KPIs, schedule performance reviews, and collaborate more efficiently.

6. AI and Predictive Analytics

AI enhances forecasting, tail-spend management, and strategic sourcing decisions. Predictive models help you anticipate supplier risks and market changes before they impact your operations.

To truly bring these technology enablers together in one intelligent, unified solution, let’s look at how akirolabs supports your indirect category management journey.

How akirolabs Empowers Smarter Indirect Category Management

Indirect category management can be one of the most challenging areas to optimize within procurement, often fragmented across multiple departments and spread across many suppliers. Traditional systems struggle with visibility and control, but akirolabs offers a sophisticated, AI-powered solution that simplifies and transforms how indirect spend is managed, allowing businesses to gain full control over their procurement strategies.

Here’s how akirolabs supports smarter indirect category management:

1. AI-Driven Procurement Strategy

With akirolabs, indirect spend is optimized through AI-powered insights, ensuring smarter procurement strategies. Unlike traditional tools, which focus on operational tasks, akirolabs empowers category managers with AI-enhanced decision-making tools that provide actionable recommendations based on historical data and market intelligence. This capability helps you identify spend optimization opportunities, reduce supplier risks, and drive efficiencies across your indirect procurement activities. 

The platform’s AI engine is designed to augment human intelligence, enabling faster, data-informed decisions without replacing the nuanced decision-making that procurement requires.

2. Cross-Functional Collaboration & Stakeholder Engagement

Indirect procurement often involves various stakeholders across departments such as IT, marketing, finance, and HR, which can make strategy alignment difficult. akirolabs facilitates collaboration across these departments by offering centralized workspaces and shared dashboards. This integration ensures all departments are aligned with procurement strategies, reducing silos and accelerating the decision-making process. 

The platform's stakeholder collaboration tools ensure that you can gather input from relevant teams throughout the category planning process, improving compliance and making the strategy development more efficient and inclusive.

3. Spend Visibility & Risk Management

Full spend visibility is crucial for effective indirect category management, and akirolabs ensures that you have a clear, real-time view of your procurement landscape. With its built-in spend analysis and risk management tools, akirolabs consolidates spend data from multiple systems, making it easier to spot inefficiencies and potential savings opportunities. The platform’s risk assessment capabilities, including supplier risk scoring and market trend analysis, allow you to proactively identify and mitigate risks across the supply chain, ensuring resilient procurement decisions even during periods of volatility.

4. Supplier Relationship & Performance Management

One of the key advantages of akirolabs is its ability to support long-term supplier relationships. By providing supplier performance tracking and collaborative relationship management, the platform enables you to identify high-performing suppliers and develop strategic partnerships that drive improved pricing, service levels, and innovation. akirolabs centralizes supplier performance information, making it easier to engage in continuous supplier reviews, improve collaboration, and optimize the supply base.

5. Value Tracking & Continuous Improvement

With akirolabs, measuring procurement success goes beyond savings. Key performance indicators (KPIs), such as compliance rates, supplier performance, and maverick spend, are tracked in real-time, helping you assess the success of your indirect category strategies. The platform’s real-time tracking capabilities allow you to adjust your strategies on the fly, ensuring you continue to meet your procurement goals. akirolabs's value tracking tools enable teams to capture both tangible savings and soft savings from improved processes, delivering ongoing business value.

6. Scalable and Modular Platform

Whether your organization is a global enterprise or a mid-sized business, akirolabs offers a modular, scalable solution that adapts to your indirect procurement needs. The platform’s no-code configuration ensures easy deployment across different procurement teams, eliminating the need for extensive IT support. akirolabs scales seamlessly as your business grows, making it an ideal choice for organizations seeking to optimize indirect spend without overwhelming internal resources.

Ready to take control of your indirect spend? Book a demo with akirolabs today and see how our platform can help you drive smarter sourcing, stronger supplier partnerships, and measurable value, fast.

Conclusion

Indirect category management is a strategic imperative. When you manage indirect spend with intention, you gain more than just cost savings. You enhance visibility, mitigate risk, drive innovation, and foster stronger alignment across your organization.

By focusing on the right strategies, KPIs, internal capabilities, and enabling technologies, you can turn a traditionally overlooked area into a source of measurable business value.

Now is the time to move from fragmented procurement to a smarter, data-driven approach that drives results.

Want to streamline and scale your indirect category management strategy?

Schedule a demo with akirolabs today and discover how our AI-powered platform can help you transform indirect procurement into a competitive advantage.