What Is Indirect Procurement?

Indirect procurement is the process by which companies purchase goods and services to support operations that are not directly used in the production of the goods they sell. This process is almost magical because, with a successful indirect procurement team supporting operations, store employees may not even realize how their supplies and equipment materialize! Indirect procurement is the fairy godmother working behind the scenes to ensure operational teams can focus on what is most important: their customers.

Having worked in retail operations for over a decade, I had limited knowledge of indirect procurement before I was tasked with opening new stores—whether through remodels or new construction. Because much of this purchasing happens behind the scenes, I was able to focus on recruiting, hiring, and training my teams to ensure a successful customer experience upon opening.

Takeaway:

  • Indirect procurement ensures store teams have essential supplies without direct involvement, enabling focus on customers.
  • Often unnoticed, it operates behind the scenes to support seamless store operations.

Impacting Operations from Day 0

I realized that my lack of knowledge about indirect procurement was shared by most of my store operations teams when they frequently asked questions like, “How do we get our shelving?” or “When will our office supplies, signage, and shopping carts arrive?” During my first store opening, I typically responded with, “Let me find out!” Through this process, I learned about the behind-the-scenes work of various teams required to open a store successfully.

Many organizations have new store opening kits with contracted suppliers. However, without the intensive contract negotiations and demand forecasting provided by indirect procurement teams, many of these suppliers would not be able to meet construction and opening timelines for deliveries. After working in procurement, I realized how imperative it is to understand supplier lead times to ensure operations teams know when orders should be placed. Without demand forecasting, a supplier may only have enough materials to supply new store openings but not enough to meet replacement needs for existing locations. Indirect procurement sets up a store for success before it ever opens its doors on day one!

Takeaway:

  • Procurement ensures timely supply deliveries, preventing delays in new store openings.
  • Demand forecasting avoids supply shortages for both new and existing stores.

Hidden Benefits of Indirect Procurement

Without a doubt, the most significant hidden benefit of a successful indirect procurement team is that it allows operations to focus on customers. The supplies and equipment provided ensure that operations teams have what they need to be successful. After all, a grocery store cannot function without shopping carts for customers or shelving to store products.

Procurement not only sources these items but also ensures that the equipment and supplies are fit for use—not only for operations but also for customers. Every detail is considered:

  • Is the shelving positioned at an appropriate height, or will customers require assistance from store employees?
  • Do employees have the right equipment to efficiently move products from the backroom to the sales floor?
  • Is the shelving durable enough to withstand the occasional bump from a rogue shopping cart?
  • Will it hold enough product to minimize restocking frequency and prevent customers from finding empty shelves?
  • Is it designed to make product rotation easy, ensuring customers always receive fresh items?

Because these questions have already been addressed, store operations teams can dedicate their time to enhancing the customer experience. Employees will have more time to maintain a clean and safe environment, drive sales by minimizing out-of-stock issues, and focus on ensuring customer satisfaction—encouraging shoppers to return for their next grocery trip.

Not only is it easy for customers to find (thanks to signage), select (thanks to well-designed shelving), and store (thanks to shopping carts) products, but they will also encounter store associates who are eager to assist. Because employees are not burdened with supply issues, they can work more efficiently—another direct benefit of the work done by the indirect procurement team. From warehousing storage to unloading delivery trucks and stocking coolers, freezers, and sales floors, indirect procurement plays a pivotal role in ensuring operational efficiency.

Additionally, when an organization implements centralized procurement software, store employees can easily order and reorder supplies. This eliminates time wasted on manual shipping and billing entries, streamlines approval processes, and ensures on-time deliveries—preventing stockouts and enhancing the overall customer experience.

Takeaway:

  • Procurement enables store teams to focus on customers by ensuring essential supplies are always available.
  • Thoughtful sourcing improves efficiency, reduces out-of-stock, and enhances the shopping experience.

Indirect Procurement Drives Success

From setting up a brand-new store before its opening to restocking shelves at the close of business each night, indirect procurement plays a pivotal role in the success of operations teams. Without these fairy godmothers and godfathers working behind the scenes to source and manage supplier contracts, operations teams would struggle to maintain a functional retail environment.

When operations and procurement teams collaborate, they can further enhance efficiency by addressing challenges faced by store employees and customers alike. Operations teams are freed to focus on the most critical part of the business: their customers—without whom no one in the organization would retain employment.

Takeaway:

  • Procurement streamlines operations through supplier management and contract negotiations.
  • Efficient procurement frees store teams to focus on sales and customer satisfaction.

About the Author

Andrea Gnezda is a seasoned procurement and retail operations leader with over a decade of experience driving results across diverse roles in the retail industry. Starting as a part-time cashier, she advanced to operational leadership roles, including over seven years with ALDI USA. There, she served as an Executive Manager in National Procurement, excelling in problem-solving, RFP management, and supplier relationships, and as a District Manager, where she oversaw safety awareness, team development, and operational excellence. Her career foundation at Marsh Supermarkets saw her progress from Co-Manager to Store Manager, refining her leadership and operational skills. During the global pandemic, Andrea transitioned into procurement, successfully navigating supply chain disruptions, mitigating cost increases, and fostering collaborative supplier partnerships. Her unique blend of operational leadership and procurement expertise makes her adept at solving complex challenges, driving efficiency, and building strong, lasting partnerships.

About Varis

Varis is a one-stop shop for supplies and services stores need to run, from frontline to finance—no paperwork, no phone tag, no confusion through a powerful eProcurement platform. Their solution allows retailers to curate supplier catalogs and access Varis’s managed suppliers, simplifying the purchasing process and enhancing efficiency.

The leadership team includes Chief Executive Officer and co-founder Prentis Wilson, who previously founded Amazon Business and scaled it to a $15B+ division, and Chief Operating Officer Daniel Smith, who has extensive experience launching and scaling businesses, including leading Amazon Business for Education to over $2B.

Varis’s platform is designed to make it easy for employees to find what they need, aiming to improve profit margins and associate experience by simplifying indirect purchasing.

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