The what, how and when when it comes to indirect spend is interesting. In this discussion someone is asking what ratio spend vs amount of people handling that spend leads up to an interesting discussion. How could or should you calculate, spend vs type spend vs type supplier vs type organisation etc.
The questions asked:
“What is the ratio of indirect procurement staff to indirect spend in your company? Let’s pick the USD as the common-denominator currency. Indirect spend means the total indirect spend of the company (ballpark to the closest million), managed and unmanaged. Do you have 1 staff for each $50M in spend, more or less? Please provide additional details, if you are comfortable, such as total indirect spend, total number of staff.”
Probably this comment is the one summoning up a common quick fix:
“Remember the straight buyer/spend ratio is only one part of the whole corporate engine for delivering a procurement. With one client we introduced corporate credit cards to 1,800 field staff to address the routine consumeable buying. We managed to eliminate 22 people from bought ledger and 30 purchasing administrators from local admin offices plus 20,000,000 pieces of paper annually from the company with only two significant errors in the first year one where an employee bought unapproved kit – and one where a manager ended up in jail.”
One question could be is the aim to do things right or do the right things – what type organisation are we talking about, can they measure if the organisation is buying in accordance to the agreements (the spend each person is supposed to handle) and that the organisation is not findings ways to go their own way. If the task is creating proper agreements or making sure management understands what to buy and how.