Indirect procurement: gain control & visibility

A shortage of suppliers is rarely the biggest challenge faced by UK organisations. Often, it’s the opposite that’s the real problem: fragmented suppliers, unmanaged spend and rising costs are threatening budgets and efficiency in 2026.

Indirect procurement is at the heart of the issue. The 2026 RS and CIPS Indirect Procurement Report found that 68% of professionals cite inflation pressures as their top challenge, and that one in five respondents are unaware of how many suppliers their organisation actually relies on. Worse still, 63% of procurement teams don’t know the total amount they spend on processing orders.

Procurement’s mandate is no longer about cutting costs. The focus has shifted to delivering control, compliance and sustainability – often with the same or fewer resources. Effective management of indirect procurement offers a solution to that challenge.

What is indirect procurement?

Indirect procurement is the sourcing of goods and services that support an organisation’s daily operations but aren’t directly used in the production of the finished goods sold to customers. It covers everything from maintenance, repair and operations (MRO) and office supplies to IT services, staff travel and workshop equipment.

According to CIPS, common categories of indirect procurement include:

• Technology: printers, phones, computers and software subscription costs

• Maintenance costs: gas, electric and water bills

• Facilities management: cleaners, security and equipment repair costs

• Employee management: training sessions and onboarding costs

• Marketing: advertising, PR and creative contractor costs.

Direct vs indirect procurement

Direct and indirect procurement both refer to the sourcing of goods and services, but there are key differences in terms of their impact on business outcomes and which categories of goods and services they encompass.

Direct procurement covers the direct materials and services that form the final products sold to customers. This includes raw materials, manufacturing components, assemblies, subassemblies and any labour costs that directly reflect production inputs. 

Indirect procurement covers everything else – the portion of spend that supports business operations but does not directly go into finished goods. The expenses that fall under this category can account for around 35–45% of total spend.

Poorly managed direct spend can affect product quality and production continuity, whereas uncontrolled indirect spend can lead to operational inefficiencies and higher costs across the board. 

Whereas direct procurement is often tightly managed by procurement teams, indirect procurement is frequently left unmonitored. This presents a problem: without spend visibility comes a higher risk of exposure to maverick spend and overspending.
 

Why indirect procurement matters today

The 2026 UK procurement landscape is one of volatility and uncertainty. Global supply chains have been hit hard by geopolitical factors. The digitisation of procurement is adversely affected by cybersecurity threats. Public sector procurement is now governed by the Procurement Act 2023, with the definition of value stretching beyond price.

The risks of unmanaged spend add to these difficulties:

• Cost pressure: inflation’s impact on bottom-line performance means every pound of unmanaged spend represents a missed cost-saving opportunity that could damage business continuity

• Supply chain disruptions: challenges in sourcing indirect goods and services can halt business operations and hurt brand reputation if the consequences are passed on to customers

• Sustainability blind spots: a lack of total spend visibility means organisations struggle to meet sustainability targets and regulatory requirements

• Compliance obligations: untracked, unapproved purchases defeat the purpose of internal procurement policies

• Productivity impact: without a clear understanding of where money is going and why, organisations struggle to operate efficiently.

As we enter a new era of procurement, every instance of unmanaged spend can damage an organisation’s ability to proactively mitigate supply chain risk, operate efficiently and meet its financial and operational targets.
 

Key challenges managing indirect procurement

Indirect procurement is often where spend visibility breaks down. Data fragmentation, maverick buying, supplier sprawl and resource constraints are the four challenges most likely to undermine procurement efficiency – and each requires a deliberate response.

The right approach can transform indirect spend from a challenge to an opportunity.
 

Lack of spend visibility and data fragmentation

When your indirect spend data is split across different departments and systems, procurement teams can’t make informed decisions about how to optimise spend. You miss out on opportunities to save costs, develop tactical category strategies and claim volume discounts.

Procurement solutions like Amazon Business address this challenge by streamlining purchasing through flexible, AI-facilitated tools and intuitive buyer experiences, which helps unlock deeper spend visibility across your organisation. This gives you a single view of where your money is going, who you’re buying from and how much you’re spending.
 

Maverick spend and non-compliant spending

When employees bypass approved channels to purchase goods or services, there are two cumulative effects: higher costs and undermined supplier contracts. Non-compliant purchasing also impedes spend visibility, leaving procurement and finance teams struggling to make heads or tails of where the budget has gone.

The solution is to make it easy to buy from approved suppliers and adhere to internal procurement policies. These policies should be clearly communicated to teams and department heads regularly. Tools like Guided Buying automatically direct employees through pre-defined approval workflows. 
 

Supplier sprawl and inefficiency

More suppliers mean more purchase orders and invoices, resulting in a higher compliance risk for your organisation. It also means more administrative work for procurement and operations teams – even when orders flow through approved channels.

Consolidate your supplier base to improve efficiency and shorten processing times. Conduct regular supplier performance reviews to understand your top performers and identify which suppliers are failing to meet the expectations defined in your contracts.
 

Limited time for strategic procurement

Day-to-day transactional purchasing takes time away from procurement teams, leaving a smaller window of opportunity to focus on work that delivers greater value to the organisation. 

But when you automate routine purchasing activities using a digital procurement system, teams can reclaim time for strategic sourcing, category management and supplier relationship management initiatives.
 

4 steps to bring indirect spend under control

There is a simple antidote – a framework – for managing indirect spend. By following these steps, you can simultaneously address compliance issues, optimise your supplier partnerships and uncover valuable spend data to inform smarter forecasting and purchasing decisions.
 

Step 1: Assess your indirect spend baseline

Conduct a comprehensive spend analysis by pulling together all your procurement data across suppliers, departments and business units. Categorise your spend to build a clear picture of where your money is going and identify your biggest opportunities to reduce costs and reveal compliance risks.

Specifically, aim to answer these questions:

• What percentage of total spend is indirect?

• What percentage of indirect spend is compliant with contracts and policies?

• How many indirect suppliers is your organisation currently using?

Analyse your spend categories to determine which have the highest potential for volume discounts if you consolidate suppliers.
 

Step 2: Control buying behaviour

Set up approval workflows based on your procurement policies to prevent maverick spend and achieve total purchasing transparency. Define your preferred suppliers for specific categories and products, and use automated buying tools to make it easier for teams to comply with internal policies.

Enable budget alerts, establish pre-approved supplier lists and use real-time dashboards to minimise friction when pushing employees towards controlled purchasing workflows.
 

Step 3: Optimise your supplier base

After determining which suppliers are delivering the most value, consider consolidating your indirect categories with a smaller number of reliable providers. This will help you access competitive pricing and volume discounts while also improving your relationships with the selected suppliers.
 

Step 4: Govern with data and KPIs

Ongoing governance is the key to maintaining healthy control of indirect spend. Work with your teams to define clear key performance indicators (KPIs) across compliance, cost savings and supplier performance. 

Important metrics to track include:

• Spend under management

• Contract compliance rate

• Supplier performance scores

• Cost savings

• Order processing costs.

Monitor these KPIs, incorporating input from a procurement system like Amazon Business, and conduct regular reviews to discuss data-driven initiatives. Reporting helps establish credibility for the procurement function among internal stakeholders and teams.
 

The UK indirect procurement landscape

Cost pressures, digitalisation and sustainability are reshaping priorities for UK procurement teams. The aforementioned RS and CIPS report reveals a shift in the procurement landscape:

• 64% of companies recognise the importance of socially responsible purchasing (SRP), but only 54% have established sustainable procurement policies

• Organisations are spending an average of £77 per order in processing costs

• Inflation, supply chain risk and disruption, global political uncertainty and contract compliance are among the top concerns for UK procurement teams.

New regulations affecting public sector procurement are influencing all UK organisations. As pressure around carbon reporting and SRP governance increases, companies in the private sector must align their indirect procurement strategy with the same rigorous requirements that apply to public contracts.

Herein lies the opportunity: investing in automation enables you to shrink order processing costs, accurately monitor sustainability and mitigate supply chain risks through real-time data analysis. Combined with a blend of skills and forward-thinking, digitalisation presents the way forward for modern UK procurement teams.
 

Evolving from tail spend to managed spend

Achieving efficient, cost-effective procurement in the UK means transitioning from tail spend to controlled spend. Tail spend – your low-value, high-frequency purchases that sit outside your indirect procurement strategy – presents a compounding issue that must be addressed.

These purchases, often made up of small, urgent transactions, compound over time. Tail spend overlaps significantly with indirect procurement – it’s where maverick spend occurs most, because low-value transactions tempt employees to bypass approved channels. By consolidating indirect suppliers and implementing more effective buying controls, you can reduce tail spend to boost procurement savings across the board.

Use analytics, automated approval workflows and supplier controls to increase resilience and spend visibility. By evolving from reactive, transactional purchasing to a data-driven spend management strategy, you can give your organisation the means to make smarter procurement decisions and reduce supply chain risk over time. 
 

Strategic value from indirect procurement

When you have control of your indirect spend, you unlock hidden cost savings that protect against inflation and supply chain risk. With rising sustainability expectations and supply concerns, the solution is better data, stronger governance and smarter sourcing initiatives.

Amazon Business is a smart business buying solution that gives you the tools you need to tame tail spend by guiding buying behaviour, analysing spend across categories and departments, and optimising your supplier base. Get in touch to see how we can give your team the spend visibility, buying controls and supplier insights necessary to turn indirect procurement into a source of strategic value.