Executive Briefings

Blurring Line Between Direct, Indirect Procurement Can Be 'Dangerous'

There's been a great myth sweeping across the world of procurement. It's come about as procurement technology has grown widespread and companies are vying for customers to sign onto their solutions. The myth takes the form of an eraser, scrubbing away the lines between direct and indirect procurement.

Usually, eliminating boundaries is a good thing. In supply chain we often talk about silos and why barriers are a problem. However, in the case of direct vs. indirect procurement, muddling the distinction can actually be dangerous. That's because direct and indirect procurement are wholly different beasts. They require different approaches and different technologies.

The myth that direct and indirect procurement can be handled in the same way has germinated as procurement technology has exploded. Look around and you'll see a cornucopia of software that claim to automate procurement. The language they use is of the mythological sort – they speak abstractly of procurement, vendors, bidding, and cost cutting. The truth is, nearly all of these solutions focus on indirect procurement. They are unequipped to handle direct procurement.

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Usually, eliminating boundaries is a good thing. In supply chain we often talk about silos and why barriers are a problem. However, in the case of direct vs. indirect procurement, muddling the distinction can actually be dangerous. That's because direct and indirect procurement are wholly different beasts. They require different approaches and different technologies.

The myth that direct and indirect procurement can be handled in the same way has germinated as procurement technology has exploded. Look around and you'll see a cornucopia of software that claim to automate procurement. The language they use is of the mythological sort – they speak abstractly of procurement, vendors, bidding, and cost cutting. The truth is, nearly all of these solutions focus on indirect procurement. They are unequipped to handle direct procurement.

Read Full Article