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We would expect that the least managed categories would provide the greatest scope for improvements that might have previously been overlooked (due to ineffective management). For example, even if the level of supplier competition for a product or service is immense (in terms of the industry), your organisation may have little to gain from focusing on realising cost savings in that category if it has been managed effectively and the benefits from leveraging supplier competition have already been harvested. It is no surprise that for many organisations we work with, indirect spend categories elicit higher potential for cost savings than direct categories. This is because organisations have gained an expertise in managing their direct categories and are good at identifying and taking advantage of any cost-saving opportunities that arise. In indirect categories, on the other hand, there are often greater opportunities because they haven’t been managed as actively or for as long a period of time.
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