Is It Time to Outsource Direct Spend Categories?

5 Feb 2019
by Rajesh Ranjan, Shirley Hung, Vatsal Gupta

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.

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