Indirect Purchasing: Often Overlooked, but Crucial to the Performance of Small and Medium-Sized Enterprises
In most small and medium-sized enterprises (SMEs) and mid-sized companies, management efforts naturally focus on so-called “strategic” procurement: raw materials, production, logistics, or equipment related to the core business. However, indirect purchases—often relegated to the background—account for a significant portion of spending— between 20 and 30 percent. of total costs—and have a direct impact on profitability, the’efficiency, and the resilience of the’company.
What is indirect procurement?
Indirect purchases include all goods and services necessary for the smooth operation ofthe companybut that are not directly related to production or the company’s core service. These include, for example:
- Office supplies, computer equipment, and software
- Telecommunications, energy, or cleaning services
- Waste management, maintenance, insurance
- Expenses related to vehicles, transportation, or travel
These positions, which are often scattered across different departments or filled on an ad hoc basis, generally fall outside the scope of an overallprocurementstrategy. The result: wasted time, scattered costs, and a lack of leverage’optimization.
Why Is Indirect Procurement Strategic for Small and Medium-Sized Enterprises?
In an environment marked by economicuncertainty,risingcosts, andsupply chaindisruptions, managing indirect procurement has become a key driver of sustainable performance. Here’s why:
- Direct savings, which are often underestimated: centralizing, pooling, or renegotiating these expenses can yield savings of 10 to 30 percent, without affecting corebusiness operations.
- Operational time savings: By streamlining indirect procurement, teams become more efficient and can focus on their core business.
- Risk mitigation: selection of reliable suppliers, improved contract management, compliance with standards (GDPR, security, CSR, etc.).
- A CSR lever: Optimizing indirect procurement alsoprovidesan opportunityto incorporateresponsible criteria (green energy, recycling, local suppliers, ethics, labor rights, etc.).
Why is indirect procurement often overlooked in small and medium-sized businesses?
In many SMEs, indirect purchases remain poorly identified and unstructured , often perceived as secondary to purchases related to production or core business activities. Several factors explain this underestimation. First , a lack of dedicated resources pushes teams to manage these expenses opportunistically, without a real strategy. Second, a vision short-term considerations predominate: these positions are considered insignificant and are not treated as performance levers.
Internalorganizationalso plays a role. Indirect procurement is often decentralized, spread across different departments or locations, without any consolidation of needs or standardization of practices. Finally, in the sometimes-stressful day-to-day operations of small and medium-sized enterprises, these purchases are frequently made in the’urgent, without competitive bidding or in-depth analysis.
This lack of structure may seem trivial, but it comes at a real cost: scattered spending, suboptimal conditions, a lack of visibility… and a loss of’opportunities to improve thecompany’soverall profitability.
How Widoo Helps Small and Medium-Sized Businesses Optimize Their Indirect Purchasing
It isprecisely these challenges that the Widoo model addresses in a concrete way. By joining the network, member companies:
- Gain access to collectively negotiated framework agreements with local suppliers selected for their reliability
- Are eligible foraa clear methodology and’personalized support to map out and optimize their spending
- Save time by outsourcing the sourcing phase, while retaining control over decisions
- Achieve sustainable cost savings without compromising quality or compliance
Inotherwords, Widoo helps turn this often-overlooked area into a real driver of performance.
In conclusion
Indirect procurement deserves a prominent place in the strategy of small and medium-sized enterprises (SMEs) and mid-sized companies. When managed effectively, it can generate financial gains, improve operational efficiency, and strengthen thecompany’soverall resilience.
Rather than simply putting up with them or managing them asthey come, we should organize and pool these purchases within’a network like Widoo, this’is choosing to’a more strategic, more effective… and more stress-free approach.
