Taking Control of Indirect Spend through Sustainable SCM

image: control“In today's economic environment, companies are continuously pressured to reduce costs in order to combat slower growth and offset commodity price increases, rising costs of energy and transportation, and various other pressures. Despite these issues and the economic instability worldwide, companies must continue to find growth opportunities to compete in the global marketplace. The question I keep returning to is, why don't more CFOs turn to indirect procurement as a significant source of savings to create a competitive advantage and fuel this growth?”  - Robert Brust former CFO for Sprint

This lead-in to a recent Business Finance article, Indirect Procurement: From Back Office to Board Room, discusses the opportunities that reside within “tier-two and beyond” business relationships.  Moving past simple cost control, leading procurement organizations are targeting real business sustainability value in their indirect spend categories.  However, this requires a higher level of involvement and an evolved organizational framework.

Our sustainability consulting considers risk along with other categorization methodologies, including spend classification and functional categorization, to be a framework from which an organization can create sustainable value deep within the supply chain.  A traditional category plan is viewed as an all encompassing analysis and management profile of spend with several major components:

  • Commercial Strategy
  • Supplier/Contract Management Plans
  • Demand Management Plan
  • Communication/Change Management Plan
  • Continuous Improvement Process

Developing a comprehensive business sustainability plan includes incorporating sustainability concepts across the entire supply chain.  Our sustainability consulting and small business resources provide information and tools to clients seeking to develop successful business sustainability strategies to drive sustainable value beyond their direct spend.

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