Why Indirect Supply Chain Is the Most Overlooked Area of Your Business
Nobody’s watching the indirect side of your business. And that’s exactly why it’s costing you more money than you think.
I’ve spent 22 years working in indirect supply chain across healthcare, higher education, manufacturing, and government. And in every single engagement, the story starts the same way. Leadership is focused on the direct materials side. The production line. The revenue drivers. Meanwhile, the indirect side, the stuff that keeps the building running, the lights on, the equipment maintained gets a shrug and a “just get the work done.”
No strategy. No optimization. No one looking at whether you’re buying smart, storing smart, or spending more than you need to. And then everyone wonders why maintenance budgets are blown and service levels are slipping.
Here’s what I want you to know: the indirect side of your business deserves the same attention as the rest of it. And when you finally give it that attention, the return on investment is significant. Hard savings. Improved morale. Better productivity. It’s not a side project. It’s a bottom-line issue.
The Invisible Bleed
Most organizations are wasting 15–30% of their total indirect spend on materials they already have but can’t find. Let that sink in. Not materials they need. Materials they already bought. Sitting in a stockroom somewhere, mislabeled or buried behind three years of clutter. So, someone orders it again. And again…And again. Meanwhile the budget keeps climbing and nobody can explain why.
And it’s not just the duplicate purchasing. It’s the labor hours your team burns every day working around a system they don’t trust. Side spreadsheets. Phone calls to “their guy.” Manual counts because the data in the system doesn’t match what’s on the shelf. Your team isn’t lazy — they’re stuck in a system that doesn’t work. They’ve been making it work through sheer willpower, and they’re exhausted.
Your data is bad. Your teams don’t trust it. And they aren’t using it. I’ve said those exact words to more VPs than I can count. And every single time, the room gets quiet. Because they know.
What My Craft Room Taught Me About Inventory
I have a pretty extensive craft room. Fabric, yarn, thread, paint, beads — you name it. Until I moved everything around last year, I had no idea what I actually had in there.
When I finally cleaned the garage so to speak, I took an inventory of everything, grouped like things together, tossed out the junk, and just got real organized. Now when I want to do anything craft-related, I walk into my space, find my materials, and get to work. No hunting. No over-buying things I already own.
Sound familiar? Because I’ve walked into stockrooms and supply closets that look exactly like my old craft room. Messy, random, and overwhelming. Organizations spending money on materials they most likely already have but can’t find. Get it organized and your team can tackle any job right away and knock it out. Anything can be messy, random, and overwhelming…but it doesn’t have to stay that way.
The Most Expensive System Is the One Nobody Uses
One of the biggest mistakes I’ve seen organizations make, across every industry I’ve worked in, is not properly leveraging the technology and systems they already have in place. Somebody a long time ago implemented it. They’ve since left. Nobody really knows what it does or how to use it. So, the team just limps along doing things the hard way, chasing their tail, trying to keep up.
They’re spending too much money on parts, squeezing as much labor as they can out of the team. And work still isn’t getting done on time. Service levels suffer. Budgets blow up. Executive leadership is upset. And the frontline is frustrated because they can never seem to get caught up.
No one has the time or expertise to stop and figure out root cause, let alone put a plan in place to fix it. So, they just keep on with the same old day to day. It’s very costly in both cash and resources.
Process Improvement Savings Are NOT Soft Savings
I need to say this louder for the people in the back: process improvement savings are NOT soft savings.
When you streamline and standardize a buying process, the productivity gains are real. Those recovered labor hours don’t just disappear. You reallocate them to work that actually adds value to the bottom line. Cleaning up an inventory database. Identifying and labeling assets. Clearing the backlog of billing exceptions so customers actually pay you. Those are real, measurable dollars.
But here’s the catch, you have to measure it. Put metrics around the labor and the shift of tasks so those regained hours are accounted for. Identifying the savings is one thing. Measuring them is the other important piece. That’s usually what gets leadership to at least try it.
Is the Lemon Worth the Squeeze?
A customer once came to me excited about “digital twins” for their facility maintenance program. It’s a real shiny object. Sounds impressive, looks great in a presentation. But it’s also a massive resource hog in both labor and cash.
So, I asked them: “What are you ultimately looking to get out of it?”
That’s always my starting question when a client is reaching for new tech. I’m not the expert in every piece of technology out there, but I can absolutely help you figure out if the investment is worth the impact. Is the lemon worth the squeeze? What’s the ROI going to look like? Do you have the resources to implement it AND sustain it?
Sometimes the answer is yes, let’s go for it. And sometimes the answer is, let’s fix the fundamentals first, because no amount of new tech is going to help if your processes and data are broken underneath it.
Three Questions Every CEO Should Be Asking
If you take nothing else from this post, take these three questions back to your next leadership meeting:
First, what are we actually spending, and on what? Not what was budgeted. What’s really going out the door, to which suppliers, for which products and services.
Second, are our processes helping or hurting? Is the buying process so complex that your team is working around it? Are work orders taking longer because of the system, not the work itself?
Third, can we measure the impact of making changes? Because if you can’t measure it, you can’t prove it. And if you can’t prove it, leadership won’t fund it next year.
These aren’t complicated questions. But the answers usually surprise people.
Where to Start
The stockroom always tells the story. Every project I take on starts the same way. I walk the floor, go into the stockrooms, and talk to the people doing the work. Because you can’t diagnose an operation from a conference room. You’ve got to be in it. Watching the workflows. Seeing where the bottlenecks are. Understanding why the team built that workaround and what they really need.
Optimizing your supplier base and getting your inventory right can save you up to 20% of your total spend. Simply by performing analytics on what you buy, why you buy it, and who you’re buying from. Then making the necessary adjustments. The baseline analysis is the key. That’s where the story starts.
If any of this sounds a little too familiar, that’s not a coincidence. It’s what I see in every engagement, across every industry. And it’s fixable. Every single time.
Let’s Have the Conversation
I’m Kathie Dodson Snyder, founder of KLD Consulting. I take on two, maybe three clients at a time because that’s what it takes to do this work the right way. I’m not building a firm. I’m building a reputation. And the best way I know how to do that is to deliver results I can put my name on.
I assess your business and deliver a baseline with recommended solutions. But then I’m in it for the long haul. I stick with you to make sure the solutions get implemented. I train your people so they understand what’s changing and how to work in the new way. And I measure the results once everything has been running and stable.
I’m your business partner. An extension of your team. And I don’t leave until we can prove it’s working.
If you’re ready to take a real look at the indirect side of your business, give me a call. I’d love to talk about it.
