Direct purchasing, such as raw materials and manufacturing supplies, often takes center stage when you think about procurement. But what about everything else your company needs to function?

From office supplies and IT services to travel expenses and marketing campaigns, indirect procurement makes up a significant portion of your company’s budget. Yet, many enterprise procurement leaders struggle to enforce visibility and control over indirect categories.

Since 2011, indirect spending has increased by approximately 7% annually worldwide. In fact, indirect sourcing typically accounts for about 10% of total revenues in the retail sector, varying by sub-sector and format. Without a clear strategy, costs spiral out of control, vendors multiply, and compliance becomes an afterthought.

This article will walk you through six crucial steps to mastering indirect procurement. These steps will ensure that you gain control, drive cost savings, and improve efficiency.

What is Indirect Procurement?

Indirect procurement refers to purchasing goods and services that are not directly tied to product manufacturing or production but are essential for day-to-day business operations. Unlike direct procurement, which impacts the end product, indirect procurement supports infrastructure, employee productivity, and service delivery.

The Role of Indirect Procurement

When managed strategically, indirect procurement becomes a key enabler of stakeholder satisfaction, cost visibility, and operational agility, particularly in complex, multi-department enterprises.

An optimized indirect procurement strategy can lead to:

• Significant cost reductions through consolidated vendor agreements.
• Stronger supplier relationships, improving service levels and reliability.
• Improved compliance by reducing unauthorized spending.

Key Categories of Indirect Procurement

Indirect procurement covers a wide range of goods and services. These categories can lead to significant cost savings, improved efficiency, and stronger supplier partnerships when managed effectively. However, spending can become fragmented without a structured approach, leading to wasted resources and hidden costs.

Here are some of the most critical indirect procurement categories:

• Office Supplies & Equipment: From everyday stationery to high-value office furniture and ergonomic workstations, these purchases keep employees productive. Without centralized procurement, you may risk overpaying for low-priority items or working with too many redundant suppliers.
• IT Services & Software: This category includes cloud computing, cybersecurity solutions, collaboration tools, and SaaS subscriptions. With 80% of businesses now relying on cloud-based tools, unmonitored IT procurement can lead to unnecessary software licenses, security risks, and escalating costs.
• Utilities & Overhead Costs: Electricity, water, internet, and security services are essential but often overlooked in procurement strategies. Negotiating long-term contracts or switching to energy-efficient solutions can generate substantial cost reductions.
• Travel & Events: Corporate travel, lodging, conferences, and employee training programs are major budget items for many companies. Businesses face inconsistent pricing and excessive expenditures without centralized travel policies or preferred vendor agreements.
• Marketing & Advertising: This category includes paid media, content creation, branding services, and PR campaigns. Marketing budgets can quickly spiral out of control, so aligning procurement with marketing objectives for optimized ROI is crucial.

Each of these categories presents unique challenges, but they also offer opportunities for you to streamline spending, negotiate better contracts, and drive efficiency. Now that we’ve covered the key indirect spend areas, let’s explore businesses' common challenges in managing them effectively.

The Common Challenges in Managing Indirect Spend and How to Overcome Them

Managing indirect procurement can feel like a constant uphill battle without a structured approach. Unlike direct procurement, where purchases are closely monitored and aligned with production needs, indirect spending is often decentralized, inconsistent, and prone to inefficiencies. It can silently drain budgets, reduce cost visibility, and complicate vendor relationships if left unchecked.

Here are some of the most common challenges your business may face when managing indirect spend:

Lack of a Formal Approval Process

Without a clear procurement policy in place, purchases can be made without proper oversight, leading to unnecessary expenses, budget overruns, and compliance risks. Employees might order supplies, software, or services based on personal preferences rather than strategic needs.

For enterprise-scale operations, these inefficiencies compound quickly across business units, exposing organizations to audit risks and cost leakages.

Establishing a structured approval workflow ensures that all spending aligns with business objectives.

Maverick Spending

Maverick, or rogue, spending occurs when employees bypass approved procurement channels and make purchases independently. This often results in higher costs, missed volume discounts, and increased security risks (especially with IT-related purchases).

This is especially problematic for global procurement leaders trying to maintain compliance and purchasing standards across regions.

A centralized purchasing system and employee education on procurement policies can curb maverick spending and drive cost savings.

Complex Procurement Processes

Employees will find ways to work around your procurement system if it is slow, overly bureaucratic, or difficult to navigate. Cumbersome approval processes, excessive paperwork, and outdated systems lead to inefficiencies and resistance.

The solution? Automating workflows, using e-procurement tools, and simplifying approval steps to make compliance easier and more intuitive.

Vendor Overload and Redundant Contracts

Without proper vendor management, companies often work with too many suppliers for the same product or service, leading to fragmented contracts, missed cost-saving opportunities, and administrative complexity.

Consolidating vendors and negotiating long-term agreements with key partners can improve efficiency and reduce costs.

The good news is that these challenges can be overcome with the right strategy. By implementing a structured procurement approach, businesses can better control spending, improve efficiency, and build stronger vendor relationships. Now, let’s break down the key steps to managing indirect procurement categories effectively.

Also read: Differences Between Direct and Indirect Spend in Procurement

6 Key Steps to a High-Impact Indirect Procurement Strategy

Effective indirect procurement management doesn’t just cut costs but enhances operational efficiency, reduces risk, and ensures smarter spending decisions. Yet, without a well-defined strategy, you may often struggle with fragmented data, uncontrolled spending, and inefficient vendor relationships.

By implementing a structured approach, you can turn indirect procurement into a powerful driver of business value. Here’s how to do it:

Step 1: Build and Communicate a Clear Purchasing Process

A well-defined procurement policy is the foundation of an effective indirect procurement strategy. Employees may make ad hoc purchases without clear guidelines, leading to cost inefficiencies and compliance issues.

To prevent this:

• Establish structured approval processes based on spending thresholds.
• Provide procurement training to ensure employees understand policies.
• Create transparent documentation that outlines purchasing guidelines and preferred suppliers.

A strong procurement process ensures consistency, accountability, and cost control across all departments.

Step 2: Centralize and Track Spend Data for Transparency

One of the biggest challenges in managing indirect spending is the lack of visibility. Procurement teams struggle to track expenses without centralized data, leading to inefficiencies and missed savings opportunities.

To improve transparency and control:

• Implement a spend management system to track and categorize expenses.
• Consolidate purchases with preferred suppliers to maximize discounts.
• Use real-time analytics to identify spending patterns and areas for improvement.

For CPOs, consolidating indirect spend into a single data environment helps drive strategic planning, stakeholder accountability, and improved vendor negotiations.

Step 3: Conduct Spend Analysis to Identify Cost-Saving Opportunities

Many businesses overspend on indirect procurement simply because they don’t regularly analyze where their money is going. Conducting a spend analysis helps pinpoint wasteful expenditures and cost-saving opportunities.

Ask yourself:

• Are multiple teams purchasing similar items separately? Vendor consolidation can cut costs.
• Are you paying for software or services that are underutilized? Optimizing licensing models can save money.
• Are you consistently renewing contracts at the same rates? Negotiating better terms can improve value.

You can take proactive steps to optimize your procurement strategy by identifying inefficiencies.

Step 4: Streamline Vendor Selection to Improve Cost and Quality

Working with too many suppliers often leads to redundant contracts, fragmented purchasing, and reduced negotiating power. A streamlined vendor selection process ensures better pricing, higher service quality, and improved efficiency.

To refine your vendor strategy:

• Limit redundant vendors in each category to drive volume discounts.
• Evaluate suppliers based on cost-effectiveness, service reliability, and scalability.
• Establish supplier performance benchmarks to ensure consistent quality and value.

Strategic vendor management strengthens supplier relationships while ensuring your business gets the best possible terms.

Step 5: Strengthen Your Negotiation Process for Maximum Savings

Indirect procurement is filled with negotiation opportunities if you know how to leverage them. Procurement teams that proactively negotiate pricing, payment terms, and contract conditions gain significant cost advantages.

Enhance your negotiation strategy by:

• Using spend data to justify better pricing and contract adjustments.
• Developing long-term supplier partnerships to secure exclusive benefits.
• Introducing performance-based contracts to align vendor goals with your business needs.

A well-executed negotiation strategy ensures you’re maximizing value while minimizing unnecessary expenses. Enterprise procurement teams can also use cross-category data benchmarks and industry indices to gain leverage in high-value negotiations.

Step 6: Leverage Procurement Technology to Drive Efficiency

Technology transforms procurement by automating workflows, improving compliance, and providing real-time insights. Investing in procurement software can enhance visibility, speed up decision-making, and reduce manual work.

Consider implementing:

• AI-powered analytics for intelligent spend tracking and forecasting.
• Automated procurement platforms to improve efficiency and enforce compliance.
• Cloud-based solutions for real-time access to procurement data, regardless of location.

With the right technology, you can streamline operations, minimize risks, and optimize your indirect procurement strategy.

By taking a structured approach to indirect procurement, you can move beyond simple cost-cutting and create long-term strategic value. A well-managed procurement strategy doesn’t just save money; it enhances efficiency, reduces risk, and strengthens supplier relationships. Now, let’s explore the best practices for indirect procurement success.

Best Practices for Indirect Procurement Success

A well-structured indirect procurement strategy isn’t just about cost savings; it’s about enhancing efficiency, ensuring compliance, and driving long-term value. When you adopt best procurement practices, you can gain better control over spending, minimize risks, and foster stronger supplier relationships.

To get the most out of your indirect procurement strategy, consider these key best practices:

1. Invest in Automation to Minimize Errors and Improve Efficiency

Manual procurement processes are time-consuming, prone to errors, and difficult to scale. By leveraging automation, businesses can:

• Reduce human errors in purchase orders and approvals.
• Speed up procurement cycles with digital workflows.
• Enforce compliance by automatically routing purchases through approved suppliers.

Automation tools help eliminate bottlenecks and ensure that procurement teams can focus on strategic decision-making rather than repetitive tasks.

2. Track Spending Patterns to Identify Cost-Saving Opportunities

A major challenge in indirect procurement is invisible spend, expenses that slip through without proper oversight. By regularly analyzing spending data, companies can:

• Pinpoint inefficiencies such as duplicate purchases or unnecessary expenses.
• Identify cost-saving opportunities by consolidating purchases with fewer suppliers.
• Ensure budget alignment by tracking spending against forecasts.

With a clear understanding of spending trends, businesses can make data-driven decisions to optimize procurement costs.

3. Educate Employees to Encourage Responsible Spending

Uncontrolled spending often happens when employees are unaware of procurement policies. To prevent unauthorized purchases and ensure adherence to procurement strategies:

• Conduct regular training sessions on procurement policies and best practices.
• Provide easy-to-access procurement guidelines to standardize purchasing.
• Encourage collaboration between procurement teams and departments to ensure alignment.

Employees who understand the procurement process are more likely to follow the correct procedures, reducing rogue spending and improving overall efficiency.

By embedding these best practices into your procurement strategy, you don’t just cut costs; you create a structured, scalable, and strategic approach to managing indirect spend. Next, let’s explore how innovative procurement solutions like akirolabs can take your strategy to the next level by integrating AI-driven insights and automation.

akirolabs: A Smarter, Data-Driven Approach to Indirect Procurement

Indirect procurement often suffers from fragmented processes, limited visibility, and inconsistent policy enforcement. akirolabs addresses these challenges by offering an AI-powered, modular SaaS platform that enables enterprise teams to manage indirect spend with structure, precision, and collaboration.

The platform supports every stage of the indirect procurement lifecycle through the following capabilities:

• Centralized Strategy Development and Governance: akirolabs serves as a single source of truth for all category strategies, including indirect categories such as IT, travel, marketing, and office services. It eliminates the need for disconnected spreadsheets by storing strategies in a governed, version-controlled repository that aligns with organizational taxonomies.
• Integrated Spend Analytics and Scenario Modeling: The platform connects with existing ERP and spend analytics systems to consolidate and categorize indirect expenditures. Using built-in tools, procurement teams can analyze spending patterns, identify inefficiencies, and simulate sourcing scenarios to uncover cost-saving opportunities.
• Vendor Rationalization and Performance Tracking: akirolabs helps reduce vendor duplication by enabling supplier scoring, contract alignment, and strategic consolidation. Procurement teams can evaluate supplier performance across service levels, compliance metrics, and financial stability to support long-term partnerships.
• AI-Powered Strategic Recommendations: The embedded AI assistant, akiroAssist, provides contextual suggestions for improving strategy quality, optimizing supplier selection, and aligning spend with business objectives. It enhances decision-making by combining real-time market intelligence with historical performance data.
• Support for Cross-Functional Procurement Initiatives: The platform allows users to develop BEYONDcategory strategies for initiatives that span multiple departments, such as sustainability programs or centralized marketing procurement. This ensures coordination between stakeholders and consistency across business units.
• Built-In Collaboration and Stakeholder Engagement: Features such as stakeholder mapping, survey distribution, and shared insights allow procurement to involve departments like IT, HR, finance, and marketing throughout the strategy creation process. This promotes alignment, accountability, and faster decision-making.

With akirolabs, indirect procurement becomes a repeatable, insight-driven function that supports cost control, policy compliance, and enterprise-wide value creation. It replaces ad hoc purchasing with structured strategies that are collaborative, transparent, and scalable across regions and departments.

Request a personalized demo and see how akirolabs can optimize your indirect procurement strategy at scale.

Conclusion

Mastering indirect procurement isn’t just about cutting costs; it’s about creating a smarter, more agile, and data-driven purchasing function that drives long-term business success. Companies that embrace automation, analytics, and strategic supplier management gain a competitive edge by reducing inefficiencies, minimizing risk, and maximizing value.

The time for reactive procurement is over. By implementing structured processes, leveraging AI-powered technology, and fostering strong supplier relationships, you can take full control of your indirect spend, enhance transparency, and unlock new levels of efficiency.

Now is the time to act. Don’t let unmanaged indirect spend drain your resources; streamline, automate, and optimize with akirolabs.

Book a demo today to take the next step toward a more intelligent, cost-effective, and strategic procurement strategy today.