Procurement Glossary
Indirect procurement: definition, processes and strategic importance
November 19, 2025
Indirect procurement comprises all purchasing processes for goods and services that are not directly involved in production. These include office supplies, IT services, facility management and consulting services. This procurement category is becoming increasingly strategically important as it enables considerable cost savings and efficiency gains. Find out below what constitutes indirect procurement, which processes are relevant and how you can optimize them.
Key Facts
- Comprises 20-40% of total procurement costs in companies
- Includes over 80% of all suppliers and transactions
- High level of complexity due to decentralized users and diverse categories
- Digitization enables cost savings of up to 15%
- Strategic bundling can reduce maverick buying by 60%
Contents
What is indirect procurement?
Indirect procurement refers to the systematic Procurement goods and services that are not directly involved in product manufacturing.
Core areas of indirect procurement
The main categories include:
- IT hardware, software and services
- Office equipment and consumables
- Facility management and building services
- Marketing and advertising services
- Consulting, training and external services
Differentiation from direct procurement
In contrast to the direct procurement of production materials, indirect procurement is characterized by decentralized determination of requirements and heterogeneous supplier structures. The material groups are more diverse and require specific procurement strategies.
Importance in modern Procurement
The strategic management of indirect procurement enables considerable cost savings and process optimization. Synergy effects can be realized through professional stakeholder management and structured bundling of requirements.
Process steps and responsibilities
The successful implementation of indirect procurement requires structured processes and clear responsibilities between central Procurement and decentralized users.
Demand management and categorization
The process begins with a systematic analysis of requirements and categorization of all indirect expenditure. Spend analyses are carried out and material classes are defined. Prioritization is based on spend volume and strategic relevance.
Supplier management and sourcing
Suppliers are selected using structured requests for quotations and suitability checks. Depending on the category, single-sourcing or multiple-sourcing strategies are used.
Operational processing and control
Operational implementation takes place via defined approval workflows and electronic ordering systems. Regular checks prevent maverick buying and ensure compliance with agreed conditions.
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Important KPIs and targets for indirect procurement
Measuring success in indirect procurement requires specific key figures that reflect both cost and process efficiency.
Cost-oriented key figures
Indirect procurement typically accounts for 20-40% of total costs. Cost avoidance through bundling effects and negotiations is recorded separately. The maverick buying rate should be below 10% to ensure cost discipline.
Process efficiency and automation
The average order processing time (purchase-to-pay cycle) is a critical indicator of process efficiency. The degree of automation for standard orders should reach over 80%. The number of suppliers per category shows the progress of consolidation.
Compliance and quality indicators
Compliance with approval workflows is measured by the workflow compliance rate. Supplier evaluations and service level agreements document quality development. Complaint management indicators show potential for improvement.
Risks, dependencies and countermeasures
Indirect procurement harbors specific risks that are amplified by its decentralized nature and complexity.
Compliance and governance risks
Decentralized procurement decisions can lead to compliance violations and unauthorized spending. Maverick buying undermines contract terms and cost targets. Clear purchasing guidelines and delegation of authority are essential.
Supplier concentration and dependencies
Critical services such as IT or facility management can become single points of failure. Supply chain resilience management and backup strategies minimize failure risks. Regular market monitoring identifies alternative providers.
Cost intransparency and budget overruns
A lack of spend transparency makes cost control considerably more difficult. Uncoordinated individual procurements prevent economies of scale and lead to inflated prices. Systematic benchmarking creates cost transparency.
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Practical example
A medium-sized mechanical engineering company consolidated its IT procurement through a central category strategy. First, a comprehensive spend analysis was carried out, which identified 200 different IT suppliers. Through strategic bundling, three preferred suppliers were established to cover 80% of the volume. A self-service portal with preconfigured catalogs reduced the order processing time from 5 to 2 days.
- 15% cost savings through volume bundling
- 60% reduction in the number of suppliers
- Maverick buying rate reduced from 25% to 8%
Trends & developments in indirect procurement
Indirect procurement is undergoing a profound transformation, characterized by digitalization, sustainability and changing working models.
Digital transformation and AI integration
Digital procurement is revolutionizing indirect categories through automated ordering processes and intelligent spend analysis. AI in Procurement enables predictive analytics for demand forecasts and automated supplier evaluations. Self-service portals significantly reduce administrative effort.
Sustainability and ESG compliance
Sustainability criteria are increasingly being integrated into tenders. The Supply Chain Act also requires increased due diligence processes for indirect suppliers. Circular economy approaches are becoming increasingly important, particularly for IT hardware and office equipment.
Hybrid working models and service integration
Remote work is fundamentally changing the demand for traditional office services. At the same time, the need for digital services and flexible workplace solutions is increasing. Agile procurement is being used to adapt to rapidly changing requirements.
Conclusion
Indirect procurement is evolving from an administrative function into a strategic value creation lever. Systematic category strategies, digital processes and professional supplier management can lead to significant cost savings and efficiency gains. However, successful transformation requires clear governance structures and the consistent involvement of all stakeholders. Companies that master this challenge create sustainable competitive advantages.
FAQ
What is the difference between indirect and direct procurement?
Indirect procurement includes all goods and services that are not directly used in production, such as IT services, office supplies or consulting. It is characterized by decentralized buyers, heterogeneous supplier structures and more complex approval processes, while direct procurement controls production-relevant materials centrally.
How can maverick buying be prevented in indirect procurement?
Through clear purchasing guidelines, electronic catalogs with preconfigured products, self-service portals and defined approval workflows. Regular spend analyses identify deviations, while training raises awareness of compliance requirements. Preferred supplier programs simplify supplier selection.
Which categories have the highest savings potential?
IT hardware and software often offer potential savings of 10-20% through standardization and volume bundling. Facility management and travel costs enable considerable savings through framework agreements. Marketing and consulting services benefit from structured tendering processes and clear service specifications.
How will digitalization change indirect procurement?
AI-supported demand forecasts, automated ordering processes and intelligent spend analyses are becoming standard. Chatbots take over simple order requests, while machine learning recognizes anomalies in spending patterns. Blockchain technology could revolutionize contract management and proof of compliance.
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