It’s impossible to avoid the headlines - nearly every industry from automotive to consumer goods is facing an increasingly difficult economic environment that shows no signs of improving anytime soon. Widespread commodity price increases, the credit crisis, and the global economic slowdown have combined to put a squeeze on both the top and bottom lines for all companies in these industries over the last year.

Given this, it is crucial that organizations look everywhere possible to find cost savings. Smart spend professionals know that one of the best places to look for value is indirect spend. A comprehensive spend management approach that includes three core activities will deliver the kind of results that can impact overall company performance:

1. Spend Access - Gaining access and visibility into spend is critical and a big challenge for indirect spend categories. The right program support and spend analytics tools can help overcome this challenge.
2. Sourcing Execution - Good sourcing requires a disciplined approach - from initial market and category assessment through contract negotiations and implementation. Driving the highest value for your organization requires a proven sourcing process, category expertise, and an electronic sourcing tool.
3. Compliance Management - Industry studies show that up to 15% of identified savings are lost without effective compliance management. With the right process, technology, and sustained effort, organizations can realize the savings they’ve negotiated.

With the pressure to reduce costs during a climate of volatile direct goods and questionable credit, Indirect Spend is one of the few “easy wins” available for companies…IF they go about it properly. I expanded on each of the 3 points above in a white paper recently. You can download the PDF version here if you are interested.

Diana Brown is a Director in Ariba’s Spend Management Services group. Diana is responsible for sales and engagement delivery for all Consumer Packaged Goods accounts.