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Improving Indirect Spend Initiatives in 2023 by Partnering with the Right Suppliers

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December 6, 2022 at 9:00:00 AM PST December 6, 2022 at 9:00:00 AM PSTth, December 6, 2022 at 9:00:00 AM PST

Spending decisions must be considered carefully in every business, especially in the economically volatile markets that are dominating the current business landscape. Typically, procurement departments use two major categories to define their spending: direct and indirect. While direct spending refers to the purchase of goods and services that are needed to produce a company’s final product, indirect spending is less definitive.

For example, indirect spending is typically referred to as “the cost of doing business.” That includes spending on the items you need to support a company’s overall functioning rather than the production of a specific product or service. Indirect spending can include purchasing office supplies, technology, and even cleaning and janitorial supplies and services. Because these purchases are mundane in nature, they are largely overlooked by procurement departments, leading to missed opportunities for savings.

With some companies spending up to half of their revenue on indirect spend categories, proper management can result in significant savings — often in the millions of dollars. One way to achieve the greatest amount of savings is through optimizing supplier management through strategic partnerships.

The Importance of Supplier Management for Smarter Indirect Spending Control 

Many companies use a “set it and forget it” philosophy when dealing with indirect spending, relying on status quo partnerships that simply renew on a regular basis. In fact, even though indirect spending may account for half — or more — of a company’s overall expenditures, CEOs often spend less than 1% of their time looking at suppliers. There are many issues with this strategy, including lack of pricing and cost control. By properly managing supplier relationships, companies can increase innovation, sustainability, and quality while reducing costs and risks. To get started, consider the following action items: 

Get the Right Data

A startling 94% of procurement executives cannot rely on their supplier master data, with 80% of transactions occurring within a small, 20% base of status quo suppliers. This overreliance on specific suppliers without supporting data can lead to numerous errors and missed opportunities for savings. To fix this problem, onboard suppliers using automated portals for greater accuracy and ensure that your suppliers are committed to identifying cost-saving opportunities.

Seek and Maintain Strong Relationships

Good communication and regular reviews of contracts can set you up for better understanding of your partnerships as well as provide ample opportunities for cost savings. Procurement departments should review contracts on a regular basis to reexamine both the need for the product and/or service and to renegotiate pricing where applicable. Large, multinational companies don’t always offer the best price point or service over their local or smaller counterparts, so savvy procurement professionals should always be on the lookout for competitive pricing arrangements.

Cost Savings Through Connectivity

When supplier onboarding is streamlined and personal relationships are maintained, suppliers are empowered to hit new levels of productivity and efficiency, which can result in cost savings for your company. Additionally, managing suppliers with an eye toward optimizing your supply chain can help you respond faster to unexpected economic events and marketplace disruptions.

Look for Suppliers with Strong ESG Goals

Finally, build your own robust environmental, social, and governance (ESG) program by working with suppliers that have strong adherence to these principles in their own business operations. Suppliers that actively adopt ESG strategies often show improvement in their financial performance as well as adding more value to the supply chain in terms of intangible benefits and stronger relationships with their communities. These kinds of supply partners typically attract higher level talent and enjoy a lower turnover for increased productivity, providing their clients with significant intangible value that can translate into cost savings and reliability. 

Choose QIS for Unparalleled Value and Savings

Choosing the right long-term partner to realize cost savings, quality, and reliability when it comes to indirect spending can be confusing. There are so many companies that claim to offer “best of” options with the hope your procurement team will simply lock their contract into place for year-over-year revenues in their pocket.

At Quality Imaging Solutions, we actively focus on helping our clients achieve reduction in their indirect spending by identifying opportunities for savings and providing enhanced transparency and visibility through the purchasing and ordering processes. In addition, we provide consulting services that can help you evaluate and manage indirect spend using specific and detailed data. And importantly, we have our own sustainability practices in place to optimize our efficiency and reliability — and help our clients become more sustainable in the process.


If you want to learn more about how a partnership with QIS can help your company get the technology and supplies you need to thrive while controlling your indirect spend, contact us today and let’s get started!