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How Outdated Indirect Spend Policies are Going to Hamper Your Savings in 2023

Published on
December 20, 2022 8:00:00 AM PST December 20, 2022 8:00:00 AM PSTth, December 20, 2022 8:00:00 AM PST

While corporate direct spend policies are often under a microscope held by C-Suite managers, indirect spending seems to suffer from neglect. This disparate way of managing these two spending categories results in an unfortunate loss of cost savings and an explosion of expenses that can make it difficult for companies to thrive. Especially in today’s teetering economy, it is increasingly important to get indirect expenditures under control.

Direct spending refers to the cost of being in business — supplies and services that help organizations provide their product or service to their target audience. Indirect spending, meanwhile, is what it takes to do business — and includes everything from office supplies and technologies to marketing, utilities, and cleaning services. Typically, direct spend is concentrated, so it is easier to control, while indirect spend spans departments and its management requires monitoring and behavioral changes that are organization wide.

One way to increase savings and reduce the costs generated by indirect spending items, it is essential to pinpoint — and remove — any outdated indirect spend policies that are impeding your progress.

Getting Rid of Outdated Indirect Spend Policies to Encourage Cost Savings

Because indirect or tail spend often involves small sums and incidental purchases, it can be difficult to track over an entire organization. Things like administrative fees, travel and hospitality expenses, corporate card costs, facility management costs, and office supplies all must be tracked — and managed — if you are to achieve significant cost savings. On top of this issue, many procurement teams are using outdated strategies for managing spend. Here are some of the top offenders:

The “Set It and Forget It” Policy

This “strategy” entails entering into an agreement with a supplier for products or services and then letting it renew year after year with little — or no — oversight or revision. When contracts are not reviewed or revised and there is little interaction with vendors or suppliers, cost-creep can occur and opportunities for cost savings are ignored or lost. Suppliers and contracts should be under constant scrutiny, ensuring that they are providing the most cost-effective and efficient solutions for your business. Staying with the “status quo” vendor may be easy, but it is not always the most advantageous solution.


Ensure your team is open to looking for more beneficial terms and solutions for other contractors and that they have good visibility into their spend with current partners by demanding better spend analysis reports from your supply chain. Smart procurement means being able to sort items using more uniform SKUs and better item descriptions. Once you have the appropriate data you can efficiently break down your spend reports into product types to better capture spending trends.

Finally, consider working language into contracts that protects your bottom line in the event of product substitutions. If your ordered product is not available through no fault of your own, you should not pay more than the contracted price for any substitution made on your behalf. 

Maverick Spending

Maverick spending occurs when someone in your organization chooses to purchase items or services that are outside of your procurement policy and contracts. It is difficult to spot — unless you have software in place that can centralize your purchasing and offer visibility into this type of spending. And make no mistake — this kind of spending can really add up. In fact, it can cut into savings by up to 20% over time, reducing the benefits you get from a robust procurement strategy.

Lack of Research

Searching for the best price — and the means to optimize your resources — can take time and effort. While it is easy to stick with the equipment and services you currently have, your vendors may not be offering you the best pricing, reliability, or quality in the current market. Smart procurement managers will kick this lack of effort to the curb and take a closer look at benchmarking items in their most common purchasing categories. For example, getting a comprehensive assessment of current print infrastructure can lead to fleet optimization. Fleet optimization can mean fewer or more targeted devices that can streamline work processes, optimize productivity, and result in deeper discounts and higher cost savings over time.


Update Your Indirect Spending Policies and Amplify Savings

There is no denying that adopting a more modern attitude toward indirect spending can have a positive impact on your bottom line in terms of savings. But it can also produce big benefits in the areas of work process improvement, employee satisfaction, and overall company productivity. Kicking the “status quo” to the curb and opening up new avenues for savings, better quality, and improved reliability bring added value to the business table — and a more competitive posture to your organization.

At Quality Imaging Solutions, we believe in providing our clients with many ways in which to increase their overall savings while providing their staff with the devices and technology they need to work more effectively and efficiently. From in-depth infrastructure assessments to technology that provides the visibility and transparency you need to cut waste and promote productivity, our team helps your team get the most out of your indirect spend budget.

If you’re ready to learn how partnering with QIS can help your organization save money, contact us today and let’s get started!