The Procurement Glossary » Indirect Spend

Indirect Spend

Spend & Analytics

Definition

Spend on goods and services that support operations but don't go into the end product — such as office supplies, IT, travel and facilities.

Shop related products

Shop office & facility supplies

Explanation

Indirect spend is fragmented across many categories and users, making it harder to control than direct spend. It is where much maverick and tail spend hides, and where catalogs, guided buying and consolidation deliver quick wins.

Example

Office supplies, cleaning and software are indirect spend, scattered across every department.

Related terms

• Direct Spend — Spend on goods and services that go directly into the products a company makes or sells.
• Tail Spend — The large number of low-value transactions and suppliers that together make up a small share of total spend but a big share of effort.
• Maverick Spend — Purchasing done outside agreed processes, contracts or preferred suppliers — 'off-contract' buying.
• Category Management — Managing related groups of spend as strategic business units, each with a tailored strategy and dedicated ownership.

Related concepts

• Spend Analytics — Turning raw procurement transaction data into a clear, categorised picture of what an organisation buys, from whom, and where the savings are.

Frequently Asked Questions

What is Indirect Spend?

Spend on goods and services that support operations but don't go into the end product — such as office supplies, IT, travel and facilities. Indirect spend is fragmented across many categories and users, making it harder to control than direct spend. It is where much maverick and tail spend hides, and where catalogs, guided buying and consolidation deliver quick wins.

Can you give an example of Indirect Spend?

Office supplies, cleaning and software are indirect spend, scattered across every department.

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