Executive Briefings

Importance of Managing Indirect Procurement Costs Can't Be Overstated, Former CFO Says

As the former CFO of such companies as Sprint, Eastman Kodak Co. and Unisys Corp., as well as vice president of finance of General Electric Co.'s plastics division, Robert Brust's management philosophy was to bring procurement into the finance department, at times meeting daily with the purchasing team to go over expenditures line by line.

While acknowledging that getting directly involved in indirect (i.e., non-production related) procurement didn't necessarily win him any popularity contests, Brust believes that CFOs need to pay closer attention to this area, particularly since it can represent as much as 20 percent to 40 percent of revenue.

Reducing the amount spent on MRO (maintenance, repair, operations) activities in particular can lead to significant savings.

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Keywords: SC Finance & Revenue Mgmt., Technology, Business Strategy Alignment, Quality & Metrics, Supply Chain Analysis & Consulting, Global Supply Chain Management, indirect spend, MRO management, maintenance, repair and operations activities

While acknowledging that getting directly involved in indirect (i.e., non-production related) procurement didn't necessarily win him any popularity contests, Brust believes that CFOs need to pay closer attention to this area, particularly since it can represent as much as 20 percent to 40 percent of revenue.

Reducing the amount spent on MRO (maintenance, repair, operations) activities in particular can lead to significant savings.

Read Full Article


Keywords: SC Finance & Revenue Mgmt., Technology, Business Strategy Alignment, Quality & Metrics, Supply Chain Analysis & Consulting, Global Supply Chain Management, indirect spend, MRO management, maintenance, repair and operations activities