Direct and indirect procurement have never looked more different. And I expect a decoupling of the two areas in 2024 . . . I see a decoupling of direct and indirect on the horizon based on the evidence at hand — at least in the near term. – Jason Busch, LinkedIn Post (October 27th, 2023)
My thoughts on the above . . .
Great post, as usual, Jason Busch! You speak a fundamental truth.
Why did the industry take so long to understand what makes perfect sense – decoupling Indirect from Direct?
The answer is a significant investment in ERP technology and a lack of understanding of commodity characteristics, e.g., Dynamic Flux versus Historic Flatline, resulting in a cost justification “pull-through” approach that led to increased maverick spend, vendor rationalization, and unnecessary change management initiatives.
Here is the link to one of the most widely read Procurement Insights posts ever titled Dangerous Supply Chain Myths – which also features a case study outcome – https://bit.ly/3oe5Vql
I guess what I am saying is that Indirect and Direct have always been “decoupled,” but because we were leading with technology, we didn’t know it – or want to know.
Added thoughts . . .
I planned to post my next installment in the Titans 2023 series based on Deloitte’s “A range of Procurement Technology Solutions” graphic below. Then, I read Jason’s terrific post on LinkedIn and felt that an essential detour in my publishing schedule was warranted.
As you read my above reply to Jason’s post, you probably know what I am going to say.
Beyond categorizing solutions as Data Management & Process Optimization, P2P, SRM, and Suite &S2C, Why don’t we create two “Master Categories” – Direct and Indirect?
For example, before moving forward to the providers listed in the P2P category, let’s revisit my previous post on the topline players in the Data Management & Process Optimization category and ask a simple question: which of the following provider solutions best serve the Direct procurement process, and which the Indirect procurement process.
For example, in which category is Tealbook, Tamr, tray.io, and Celonis strongest?
Now you might rightfully suggest that Data Management & Process Optimization is of equal importance to both Indirect and Direct Spend, and you would be 100% correct. However, in much the same way that Tylenol and Advil both relieve pain, they ultimately treat different types of pain, e.g., mild pain versus chronic pain.
Using the Tylenol and Advil analogy, I will again pose the following question: which of the above-listed providers in the Data Management & Process Optimization category would best address the Direct or Indirect Spend pain with which many organizations are now dealing – and why?
I will also be applying the same question to my reviews of the other categories.
30
Procurement Insights
A Direct and Indirect Procurement Decoupling? My Response To A Great Post By Jason Busch.
Posted on October 29, 2023
0
Direct and indirect procurement have never looked more different. And I expect a decoupling of the two areas in 2024 . . . I see a decoupling of direct and indirect on the horizon based on the evidence at hand — at least in the near term. – Jason Busch, LinkedIn Post (October 27th, 2023)
My thoughts on the above . . .
Great post, as usual, Jason Busch! You speak a fundamental truth.
Why did the industry take so long to understand what makes perfect sense – decoupling Indirect from Direct?
The answer is a significant investment in ERP technology and a lack of understanding of commodity characteristics, e.g., Dynamic Flux versus Historic Flatline, resulting in a cost justification “pull-through” approach that led to increased maverick spend, vendor rationalization, and unnecessary change management initiatives.
Here is the link to one of the most widely read Procurement Insights posts ever titled Dangerous Supply Chain Myths – which also features a case study outcome – https://bit.ly/3oe5Vql
I guess what I am saying is that Indirect and Direct have always been “decoupled,” but because we were leading with technology, we didn’t know it – or want to know.
Added thoughts . . .
I planned to post my next installment in the Titans 2023 series based on Deloitte’s “A range of Procurement Technology Solutions” graphic below. Then, I read Jason’s terrific post on LinkedIn and felt that an essential detour in my publishing schedule was warranted.
As you read my above reply to Jason’s post, you probably know what I am going to say.
Beyond categorizing solutions as Data Management & Process Optimization, P2P, SRM, and Suite &S2C, Why don’t we create two “Master Categories” – Direct and Indirect?
For example, before moving forward to the providers listed in the P2P category, let’s revisit my previous post on the topline players in the Data Management & Process Optimization category and ask a simple question: which of the following provider solutions best serve the Direct procurement process, and which the Indirect procurement process.
For example, in which category is Tealbook, Tamr, tray.io, and Celonis strongest?
Now you might rightfully suggest that Data Management & Process Optimization is of equal importance to both Indirect and Direct Spend, and you would be 100% correct. However, in much the same way that Tylenol and Advil both relieve pain, they ultimately treat different types of pain, e.g., mild pain versus chronic pain.
Using the Tylenol and Advil analogy, I will again pose the following question: which of the above-listed providers in the Data Management & Process Optimization category would best address the Direct or Indirect Spend pain with which many organizations are now dealing – and why?
I will also be applying the same question to my reviews of the other categories.
30
Share this:
Related