- In most companies, management’s focus is on the areas that directly drive the business: core procurement, production, supply chain, and commercial activities. These areas receive attention because they impact EBITDA, gross margin, cash flow, and the company’s overall performance.
But alongside these are a number of cost categories that are rarely treated with the same rigor: logistics, facilities, packaging, marketing, IT licenses, MRO, telecommunications, and other indirect procurement.
They are rarely considered strategic.
Yet they affect the company’s OPEX, cost-to-serve, working capital, and ultimately the bottom line—far more than most people expect.
The Big Blind Spot
Indirect procurement often ends up as locally managed budget items that are handled differently across the organization. This means:- Agreements that are never benchmarked
- Suppliers that are never put out to competitive bidding
- Contracts that continue out of sheer habit
- Prices that do not reflect the market
- Volumes that are not consolidatedNot because the organization is inattentive—but because no one has the time or insight to work systematically on these areas.
- When something isn’t perceived as “strategic,” it becomes an area where no one asks the critical questions.
An overlooked potential of 20% or more
When companies finally review these indirect areas using a professional, data-driven approach, the results almost always show the same thing:
There is an optimization potential of 20% or more. - It’s not a matter of cutting costs.
It’s about paying fair prices, having right solutions, and ensuring that OPEX doesn’t grow faster than the business. - For a CFO, it’s pure value creation:
Low risk, direct impact on EBITDA, quick realization.
Why the potential is overlooked
The typical explanations from CEOs and CFOs are the same:- “It seems too small to spend time on.”
- “We lack the transparency to assess it.”
- “We believe it’s already optimized.”
- “We have more important priorities.”But precisely because these areas are scattered, complex, and lack ownership, the potential for improvement is often significant.
Why it should be treated strategically
When indirect procurement is analyzed and managed strategically, the company reaps the benefits of professional procurement—even in areas that were previously managed rather than led. - The advantage is clear:
Better prices, better contracts, better management.
Direct impact on OPEX, EBITDA margin, and cash generation.
The simple question you should ask
When was the last time you received a data-driven, independent answer as to whether your indirect costs are actually optimized?
If the answer isn’t clear, there’s likely still money on the table. - If you’d like to learn more, contact Thomas Skov, partner at ERA Group, by phone at +45 30361352 or send an email to tskov@eragroup.com.
