Do you know the characteristics that differentiate direct and indirect procurement?
Direct procurement is characterized by high volumes, regular purchases, and a small number of suppliers.
Indirect procurement, and MRO in particular, is characterized by low volumes, irregular purchases, a large number of different items, and a large number of suppliers.
These key differences mean that the cost of managing indirect procurement can be 4X the cost of direct procurement. As a result many companies fall into what I call the MRO complexity trap.
To avoid this trap companies need to consider a different model for managing their MRO procurement.
This is the basis of our most recent webinar covering procurement outsourcing of indirect materials and specifically addressing the various pros and cons.
The key take-aways are:
- The key differences between indirect and direct procurement
- The unique management cost profile of each type
- The MRO procurement complexity trap
- The pros and cons of procurement outsourcing
- The results of a success story
To accompany the webinar we have created an associated white paper. This covers all the issues discussed and provides a handy reference.
Here is a link to download the associated white paper.