Procurement, once considered a back-office function, has seen a lot of changes in the last couple of years, with enterprises centralizing and streamlining entire processes, adopting strategic and collaborative approaches with suppliers, and outsourcing to leverage third-party expertise. However, most of these changes are focused on indirect procurement. The direct spend space has seen fewer changes due to enterprise reluctance to outsource a core function, and, therefore, remains riddled with inefficiencies, resulting in huge areas of untapped opportunity. This is where third-party technology and process expertise can help, by mitigating these concerns and guiding enterprises on a transformation journey to innovate direct spend management. This paper explores the intrinsic differences between direct and indirect procurement and discusses challenges in direct spend management. It highlights the benefits of tapping into external expertise, as well as current adoption drivers. Finally, it discusses the key issues for CPOs to consider when planning to outsource direct spend. Membership(s)   Procurement Outsourcing  

As business environments change at a rapid pace, procurement functions are under increasing pressure to deliver benefits beyond cost savings. By leveraging approaches such as category management and transforming processes using digital solutions, organizations have derived significant business value. However, most of these efforts have primarily focused on indirect spend management. Today, many organizations manage direct spend categories through traditional ERP and legacy systems, which limit the benefits they can achieve – even with effective category management. Going forward, organizations are likely to realize a new wave of benefits by leveraging digital solutions such as advanced analytics, intelligent automation, Internet of Things (IoT), mobility, and blockchain to drive real value from category management. This viewpoint discusses the need for a robust digital category management approach to manage direct spend categories and includes the following topics: Digital solutions that are driving more effective category management for direct spend Potential business outcomes companies can achieve by integrating these digital solutions Key considerations that companies need to keep in mind when deploying digital solutions to manage direct spend categories Membership(s)Procurement Outsourcing