Direct and indirect, why the distinction?

26 April 2012
Speaking to CPOs and senior procurement professionals on the sidelines of the ProcureCon Indirect conference yesterday, there was a familiar complaint about the low profile of those working on indirect spend compared to their direct spend counterparts. This does indeed seem odd, given the opportunities indirect categories such as travel, IT and marketing present to create value for the business, with the greater variety and variance they often offer compared to many direct spends. It’s not even as if there is a specific definition of what constitutes either category. In fact, it made me wonder why the profession continues to make this distinction? At one of the panel sessions yesterday, one speaker attempted to reposition the debate, to think about it in terms of spends that are core and non-core to the business. But I don’t believe that is satisfactory either. Would the marketing function make a division between core and non-core marketing activity? Would in-house counsel try to separate direct and indirect legal services? I doubt it. If procurement was to abandon this distinction, perhaps it would change the perception the role of purchasing is somehow less vital to the business than the work of other functions.
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