Indirect spending departments around the world got a load of responsibility dumped into their lap when the economic crisis hit and top management demanded cutbacks. While this may make some departments, like sales, lose sleep at night – the indirect departments seem to love their new-found power. “When things are all fine, our job is harder because there is an excess of capital,” Christoph Schittny, head of general procurement at Bayer Health Care, told me. “When the economy gets tough, our job actually gets easier because people suddenly realize they need us and will listen to our suggestions.”
Many departments are using this opportunity to make changes in the way their companies are spending their budget. At a recent Indirect Spending Summit held by the Global Supply Chain Council, several heads of indirect expressed with great glee their recent departmental transformations. One of the most common trends is a standardization process which allows company employees to better keep track of all of their expenses by creating e-catalogs, employee webpages and credit cards that only allow employees to buy certain things, in accordance with their company status.
Siemens has even gone so far as to create a new organization which helps all other department branches manage their buying – in fact, at Siemen’s, nothing gets bought without indirect’s support. “People used to laugh at us and say that we’re the department that buys the pencils,” said Helge Hildenbrant, GM of procurement and logistics of Siemens, China. “Now they all have to consult with us to create a proposed spending budget.” Hildenbrant is referring to Siemens’s new procurement integration system, which has the worldwide indirect department linked, and now acts more as a spending consultant to different branches. In fact, now, no one can buy anything without the approval of Hildenbrant’s department.
While this measure may sound a little extreme, what Hildenbrant has succeeded in creating new attention to internal best practices and opened up avenues of communication between departments in terms of what money is going where. And isn’t this something companies should know anyway?
