October Roundtable Discussion Highlights: Indirect Cost Savings
October 17th, 2024, Executive Roundtables for purchasing leaders
The roundtable theme was how purchasing leaders are driving cost savings initiatives and buyer skill development for indirect purchasing. Highlights of the roundtable discussion are summarized below.
- Global Director of Capital Strategic Sourcing for a flat glass manufacturer shared that the majority of the spend is capital, and 20+ assets are refreshed every 20 years. Their purchasing team is global, and scoping has been an issue – they are benchmarking how sister companies approach scoping to develop buyer skills in that area.
They also shared that they are moving to rate-based supplier contracts with caps and incentives to be more efficient. The company uses Coupa for indirect, but they have found it is inadequate for capital projects.
- VP of Global Supply Chain for an automotive castings and machining supplier shared that indirect spend has been managed by the plants. They built a corporate indirect buying team and introduced a P2P system for indirect in 2024 to force good sourcing behaviors. The corporate team will focus on sourcing events in 2025 to leverage organization-wide spend.
They also shared that some buyers have been going through Online Executive MS Automotive SCM program at Wayne State University.
- Strategic Sourcing Director at an HVAC manufacturer shared that the company’s focus in recent years has been on clawing back covid-era price increases and will be moving to implementing a structured process for consolidating spend in 2025. They plan to increase the use of catalogs through Ariba and increase the use of the Fair Market tool for running bids.
They also shared that buyer skill development has been mainly on-the-job training related to negotiations and contract management. Going forward, they plan to focus on soft skills management and stakeholder engagement.
- Sourcing Director for a manufacturer of returnable packaging shared that indirect sourcing had been managed at the plants, but they’ve stepped into a new position to consolidate suppliers during global negotiations and standardize vendors.
- VP Strategic Sourcing for a retailer shared that their North America footprint has been built on acquisitions and they’ve recently created an Indirect Procurement department with 5 team members. In 2024, they’ve focused on IT and found that the IT department wasn’t trained to work with procurement, consequently involved the purchasing team too late. They’ve established a cross-functional team and developed metrics that will lead to IT engaging procurement earlier. In 2025, the team will address capex (store construction).
They also shared that in Europe, Universities offer Masters of Strategic Sourcing programs for buyers that they haven’t found in the U.S.
- Indirect Purchasing Director for an Automotive OEM shared that they are organized regionally, and they’ve established a standard of market testing indirect categories every 3-5 years in their region.
They are also focusing on developing synergies across the various businesses within their region. They shared that the buyer skill development focus has been on soft skills – emphasizing buyers to talk to stakeholders, not just run sourcing events.
- VP of Global Supply Chain and Operations for a construction services provider shared that, because they’ve grown through acquisition, there is a lot of maverick spend. This year, they introduced a global spend tool (Symphony) and plan to introduce indirect catalogs in 2025