How to Reduce 15–30% of Indirect Spend: Strategies for CFOs in ANZ

Indirect spend—the costs of goods and services not directly tied to your core mission or product—can quietly siphon off budget in government agencies and commercial organisations. For C-level executives like CFOs in Australia and New Zealand, reducing indirect spend by 15–30% offers a powerful opportunity to redirect funds, enhance efficiency, and strengthen financial health. But it’s not a quick fix—it requires a strategic, multi-pronged approach.

At Trace Consultants, we’ve witnessed how indirect spend can balloon, from unchecked supplier contracts to sprawling project scopes. We’ve also shown it can be reined in. Recently, we partnered with a large multinational client and cut their indirect spend by 17% in just 4 months. In this article, we’ll unpack the strategies that drove that success and outline how ANZ organisations can achieve similar gains. We’ll cover managing scope creep, testing the market, finding alternative suppliers, leveraging National Contracts and scale, benchmarking, supplier performance management, insourcing, and reducing scope—showing how Trace Consultants can help CFOs turn cost control into a competitive edge.

The Hidden Cost of Indirect Spend

Indirect spend includes expenses like IT services, office supplies, travel, professional fees, and facilities management. Unlike direct spend, which drives revenue or core services, indirect costs often escape close scrutiny—yet they can represent 20–40% of total expenditure. In ANZ, where economic pressures demand fiscal discipline, slashing 15–30% from this category can be transformative. Let’s explore how to make it happen.

Managing Scope Creep

Scope creep is a budget’s stealthy saboteur. It occurs when projects or contracts expand beyond their original scope, often unnoticed until costs escalate. In government agencies, a simple training program might grow into an elaborate multi-year initiative. In commercial firms, a logistics contract could swell with unplanned extras.

How to Stop It

• Lock in Scope: Define clear, measurable deliverables at the outset.
• Monitor Closely: Review progress against the baseline to catch creep early.
• Control Changes: Mandate C-level approval for scope expansions, tied to cost-benefit reviews.

Savings Potential

Tight scope management can trim 5–15% from project-related indirect spend by cutting low-value add-ons.

Testing the Market and Finding Alternative Suppliers

Procurement is a goldmine for savings, especially when you test the market and seek alternative suppliers. Sticking with legacy vendors—a common trap in government and commercial settings—can lock in inflated rates or stale terms.

Why Test the Market?

• Cost Clarity: Market testing reveals if you’re overpaying relative to current pricing.
• Fresh Options: New suppliers often offer innovative solutions or leaner costs.
• Bargaining Power: Market insights bolster negotiations with incumbents.

How to Test Effectively

• Issue RFPs/RFIs: Launch Requests for Proposals (RFPs) or Information (RFIs) in categories like IT, logistics, or consulting to uncover options.
• Run Pilots: Test new suppliers on a small scale—e.g., one region or department—to evaluate performance without full risk.
• Target ANZ Suppliers: Prioritise local or regional players for competitive pricing and faster service.

Finding Alternative Suppliers

Alternative suppliers can shake up the status quo. A government agency might swap a global IT provider for an ANZ-based firm with lower overheads. A commercial organisation could replace an expensive logistics vendor with a tech-savvy alternative.

• Broaden the Net: Explore startups, SMEs, or niche specialists beyond big-name incumbents.
• Assess Holistically: Weigh price, quality, scalability, and strategic fit.
• Ease Transitions: Use phased rollouts or dual-supplier setups to minimise disruption.

National Contracts and Leveraging Scale

National Contracts and scale leverage are powerful tools for indirect spend reduction, especially for organisations with multiple sites or large footprints across Australia and New Zealand.

The Power of National Contracts

National Contracts consolidate purchasing under a single agreement, often with one supplier or a select group, to standardise terms and pricing.

• Consistency: Uniform rates and service levels across regions cut variability costs.
• Negotiation Strength: A single contract covering all ANZ operations gives you clout to demand discounts.
• Simplified Management: Fewer contracts mean less admin overhead.

For government agencies, this might mean a National Contract for office supplies across all departments. For commercial firms, it could be a unified facilities management deal spanning multiple locations.

Leveraging Scale

Scale amplifies savings. The larger your spend or geographic reach, the more you can extract from suppliers.

• Volume Discounts: Bundle demand to negotiate lower unit costs—e.g., a 15% cut on IT hardware for buying in bulk.
• Standardisation: Uniform specs (e.g., one software platform across sites) reduce complexity and cost.
• Cross-Regional Deals: Use your ANZ presence to secure region-wide pricing advantages.

Challenges to Watch

National Contracts require alignment across stakeholders—missteps can lead to resistance or poor adoption. Leveraging scale demands accurate spend data to maximise leverage.

Go-to-Market (GTM) Strategies

A robust GTM approach complements market testing and National Contracts.

GTM Tactics

• Competitive Tenders: Regularly bid out contracts to keep pricing sharp.
• Market Research: Use ANZ-specific data to inform negotiations.
• Consolidation: Reduce supplier numbers to boost scale benefits.

Benchmarking for Savings

Benchmarking compares your indirect spend to industry or peer norms, exposing overpayments.

How to Benchmark

• Internal Review: Analyse spend across departments or sites.
• External Data: Use ANZ benchmarks to gauge performance.
• Category Focus: Target high-cost areas like utilities or consulting.

Actionable Outcomes

If your facilities costs are 20% above average, benchmarking guides renegotiations or market tests.

Supplier Performance Management and KPIs

Suppliers can make or break savings. Weak oversight risks overbilling or poor value.

Key KPIs

• Cost Metrics: Track pricing or total spend per supplier.
• Service Levels: Measure delivery, quality, or compliance.
• Innovation: Reward cost-saving ideas from suppliers.

Enforcement

Quarterly reviews and KPI-linked contracts keep suppliers accountable.

Impact

A supplier hitting 98% service targets might still overcharge by 15%. KPIs uncover this, enabling action.

‍

Insourcing Activities

Outsourcing isn’t always cost-effective. Insourcing can cut indirect spend when internal options beat external rates.

Where to Insource

• Routine Tasks: Cleaning, basic IT, or admin often cost less in-house.
• Specialised Roles: Training staff to replace consultants saves long-term.

Trade-Offs

Insourcing needs upfront investment but can yield 15–20% annual savings after year one.

‍

Reducing Scope

Cutting non-essential scope delivers quick wins.

How to Reduce

• Prioritise Value: Focus spend on core outcomes (e.g., citizen services or customer experience).
• Cut Waste: Cancel unused subscriptions or redundant services.
• Right-Size: Match service levels to actual need.

‍

How Trace Consultants Can Help

Reducing indirect spend by 15–30% is within reach with Trace Consultants. We bring:

• ANZ Expertise: Tailored solutions for government and commercial sectors.
• Proven Tools: From National Contracts to KPIs, our methods deliver.
• Hands-On Execution: We implement, not just advise.

Our work with a multinational client proves it. Over 4 months, we:

• Controlled scope creep in facilities.
• Tested the market and onboarded alternative suppliers for professional services.
• Secured a National Contract for travel, leveraging scale.
• Benchmarked Corporate Services & IT spend for savings.
• Benchmarked Property Services spend for savings.
• Set supplier KPIs and insourced HR tasks.

The result? A 17% indirect spend cut—real, measurable impact.

Overcoming Challenges

Challenge 1: Resistance

Teams resist new suppliers or National Contracts.

• Solution: We drive change with data and stakeholder buy-in.

Challenge 2: Data Gaps

Poor visibility hampers scale leverage.

• Solution: Trace integrates systems for clarity and builds KPI dashboards for benefits tracking and ongoing supplier management.

Challenge 3: Transition Risks

Market tests or insourcing can disrupt.

• Solution: We plan phased rollouts for smooth shifts.

Your Action Plan

Start cutting 15–30% today:

1. Audit Spend: Map indirect costs by category and supplier.
2. Set Targets: Aim for 15–30% reductions.
3. Test the Market: Launch RFPs and explore National Contracts.
4. Leverage Scale: Consolidate spend for discounts.
5. Partner with Trace: Accelerate results with us.

The Bottom Line

For ANZ CFOs, reducing indirect spend by 15–30% is achievable with strategies like scope control, market testing, alternative suppliers, National Contracts, scale leverage, benchmarking, KPIs, insourcing, and scope reduction. Trace Consultants turns potential into results—just look at our client’s 17% cut in 12 months.

Ready to act? Contact Trace Consultants to transform your indirect spend strategy.

‍

Introduction: How Procurement Can Unlock Cost Savings and Drive Strategic Value

In today’s economic climate, organisations are under increasing pressure to reduce costs while maintaining service quality. Rising supply chain costs, inflationary pressures, and growing regulatory requirements make effective procurement strategies more critical than ever.

To explore how businesses can optimise their procurement functions, we spoke with Kingston Yong, Manager at Trace Consultants, about the key cost-saving levers in indirect procurement, supplier negotiations, contract performance, and strategic procurement transformation.

‍

Interview with Kingston Yong

Q: How can organisations reduce costs through indirect procurement projects?

Kingston Yong:
Indirect procurement is often overlooked, but it represents a significant cost-saving opportunity for businesses. Many organisations focus on direct spend—such as raw materials and manufacturing components—while indirect categories like facilities management, IT, professional services, travel, and marketing can account for 20-40% of total spend.

By conducting a detailed spend analysis, organisations can identify inefficiencies, consolidate suppliers, and negotiate better rates. One of our clients in the healthcare sector saved 22% on facility management costs by optimising their contract structure and moving to a performance-based pricing model.

Q: How can procurement benchmarking and supplier negotiation strategies unlock savings?

Kingston Yong:
Benchmarking is essential to understanding where an organisation’s procurement costs sit in comparison to industry standards. We often see businesses overpaying for services and materials due to legacy contracts, lack of market visibility, or underutilisation of economies of scale.

By leveraging market intelligence and procurement analytics, organisations can:

• Identify cost reduction opportunities by comparing current spend against industry benchmarks.
• Improve supplier negotiations by using competitive insights.
• Implement structured tendering processes to drive cost efficiencies.

At Trace Consultants, we have helped clients reduce supplier costs by introducing structured category management and negotiation strategies.

Q: How can organisations reduce supply chain costs without compromising service quality?

Kingston Yong:
Cost reduction must be balanced with operational efficiency. The biggest mistake companies make is focusing only on unit price reduction, which can lead to quality issues, service delays, and supply risks.

Instead, we recommend an end-to-end cost optimisation approach that includes:

• Supplier performance management – Ensuring suppliers deliver on agreed service levels to avoid hidden costs.
• Demand management – Reducing unnecessary purchases and improving forecasting accuracy.
• Process automation – Streamlining procurement processes through digital tools to cut administrative costs.

For example, we helped a retail business achieve a 15% cost reduction in packaging procurement while maintaining quality by consolidating suppliers and leveraging long-term contracts.

Q: How can Australian businesses improve contract performance and supplier management?

Kingston Yong:
A well-managed contract ensures cost predictability, performance compliance, and risk mitigation. However, many businesses lack real-time visibility into supplier performance, leading to cost overruns and operational inefficiencies.

Key steps to improving contract performance include:

• Implementing clear KPIs and SLAs to measure supplier effectiveness.
• Using contract lifecycle management (CLM) tools to track performance and compliance.
• Regular supplier reviews and renegotiations to ensure continuous value delivery.

Q: How can businesses navigate the rising costs of supply chain operations?

Kingston Yong:
Supply chain costs are increasing due to inflation, transportation expenses, and rising raw material costs. To combat these pressures, businesses should focus on:

• Strategic sourcing – Evaluating alternative suppliers to diversify risk and improve pricing.
• Supply chain collaboration – Working with suppliers to identify cost efficiencies.
• Process standardisation – Reducing variation in procurement processes to lower administrative costs.

At Trace Consultants, we recently helped a manufacturing client cut logistics costs by 20% by redesigning their supplier distribution network.

Q: How can organisations move from tactical procurement to strategic procurement?

Kingston Yong:
Many organisations still operate in a reactive, tactical procurement model, where procurement teams focus on transactional purchasing rather than strategic value creation. Moving towards strategic procurement involves:

• Developing category strategies to align procurement with business goals.
• Enhancing supplier partnerships to drive innovation and long-term cost efficiencies.
• Leveraging digital procurement tools to automate and optimise processes.

How Trace Consultants Can Help

At Trace Consultants, we specialise in helping businesses:

✅ Conduct Procurement Spend Analysis – Identifying cost-saving opportunities across indirect categories.
✅ Optimise Supplier and Contract Management – Implementing performance-driven contract strategies.
✅ Develop Procurement Benchmarking & Cost Optimisation Strategies – Aligning pricing structures with market intelligence.
✅ Enable Digital Procurement Transformation – Implementing automation and analytics for smarter decision-making.
✅ Drive Strategic Sourcing Initiatives – Reducing costs while maintaining service excellence.

With a data-driven approach and deep procurement expertise, Trace Consultants empowers organisations to unlock cost savings, improve supplier relationships, and future-proof their procurement functions.

Final Thoughts

Procurement is no longer just about cost-cutting—it’s a strategic function that impacts an organisation’s long-term profitability and supply chain resilience.

For businesses looking to reduce procurement costs, improve supplier performance, and drive operational excellence, now is the time to act.

Want to discuss how Trace Consultants can help? Get in touch today.

Procurement as a Strategic Lever for Business Success

Procurement is a key driver of operational efficiency and cost optimisation across industries. For government agencies, retail chains, hospitals, aged care providers, fast-moving consumer goods (FMCG) companies, and manufacturers in Australia and New Zealand, effective procurement can mean the difference between market leadership and inefficiency.

Our Go-to-Market Strategy & RFx Support program is designed to help organisations navigate procurement complexities, enhance supplier engagement, and streamline the RFx process—delivering tangible cost savings, compliance assurance, and long-term strategic value.

This article explores how organisations can improve procurement outcomes through structured go-to-market strategies and RFx management.

The Importance of Procurement Excellence

Procurement extends beyond purchasing—it builds supplier partnerships, ensures cost efficiency, and enables long-term value creation. As supply chains grow more complex, a structured approach to procurement is critical, particularly in:

• Government Agencies – Ensuring transparency, compliance, and accountability.
• Retail – Managing costs and supplier relationships in response to dynamic demand.
• Hospitals & Aged Care – Procuring essential supplies while adhering to strict quality and regulatory standards.
• FMCG & Manufacturing – Achieving scalability and innovation through strategic sourcing.

A well-structured go-to-market (GTM) strategy and RFx process help organisations achieve these goals effectively.

‍What is a Go-to-Market Strategy?

‍A go-to-market (GTM) strategy in procurement outlines how an organisation approaches the market, engages suppliers, and secures optimal outcomes. It includes:

• Market Analysis – Understanding industry trends, supplier landscapes, and competitive positioning.
• Demand Planning – Defining procurement needs based on business objectives and market conditions.
• Stakeholder Alignment – Ensuring procurement strategies align with broader business goals.
• Supplier Engagement – Identifying and engaging the right suppliers through structured processes.
• Evaluation Frameworks – Developing criteria to assess supplier capabilities and proposals.

A robust GTM strategy not only reduces costs but also fosters sustainable supplier relationships and drives innovation.

‍Understanding the RFx Process

‍The RFx process—which includes Request for Information (RFI), Request for Proposal (RFP), Request for Quotation (RFQ), and Request for Tender (RFT)—is essential for sourcing the right suppliers and solutions.

• RFI – Gathers preliminary supplier information and capabilities.
• RFP – Solicits detailed proposals for goods or services.
• RFQ – Focuses on price quotations for specific deliverables.
• RFT – Used for large-scale, complex procurement needs, especially in government projects.

Effective RFx management ensures clarity, fairness, and efficiency in supplier selection but requires expertise in documentation, evaluation, and negotiation.

‍Challenges in Procurement & RFx Processes

‍Organisations in Australia and New Zealand face several procurement challenges, including:

• Market Complexity – Navigating evolving supplier landscapes and global disruptions.
• Resource Constraints – Limited internal expertise to manage complex RFx processes.
• Regulatory Compliance – Adhering to strict industry and government regulations.
• Cost Pressures – Balancing cost reduction with quality and innovation.
• Supplier Risk Management – Ensuring reliability and minimising over-dependency.

These challenges highlight the need for expert support in developing GTM strategies and executing RFx processes effectively.

‍Our Approach to Go-to-Market Strategy & RFx Support‍

At Trace Consultants, our Go-to-Market Strategy & RFx Support program is designed to streamline procurement, mitigate risks, and drive measurable outcomes.

‍1. Market Analysis

• Assessing supplier capabilities, industry trends, and competitive dynamics.
• Identifying risks and opportunities for optimal market positioning.

2. Demand Planning & Requirements Gathering

• Aligning procurement objectives with business goals.
• Defining critical requirements through workshops with key stakeholders.

3. Sourcing Strategy Development

• Leveraging competitive dynamics to secure the best deals.
• Balancing cost, quality, and innovation in supplier selection.
• Diversifying supplier portfolios to mitigate risks.

4. RFx Documentation Support

• Drafting clear and precise RFx documents.
• Ensuring compliance with industry standards and procurement regulations.
• Aligning documentation with evaluation criteria for seamless assessment.

5. Evaluation Framework Design

• Developing objective supplier assessment criteria.
• Establishing weighting mechanisms to prioritise key factors.
• Ensuring transparency and fairness in evaluations.

6. Supplier Evaluation & Negotiation Support

• Providing technical and commercial insights for proposal assessments.
• Facilitating negotiations to secure favourable terms.
• Ensuring alignment with long-term procurement goals.

7. Contract Finalisation

• Negotiating and structuring contracts with enforceable terms.
• Embedding risk mitigation clauses to safeguard organisational interests.
• Ensuring compliance with regulatory and industry requirements.

The Benefits of Our Program

‍Organisations that leverage our Go-to-Market Strategy & RFx Support experience significant improvements in:

✔ Efficiency – Streamlined RFx processes reduce time and resource burden.
✔ Cost Optimisation – Competitive pricing and expert negotiations drive savings.
✔ Supplier Excellence – Rigorous evaluation ensures reliable, high-quality suppliers.
✔ Compliance Assurance – Adherence to procurement regulations and best practices.
✔ Strategic Value Creation – Procurement aligns with long-term organisational goals.

‍Industry-Specific Applications

Government Agencies We help agencies navigate complex regulations, ensuring procurement transparency and maximising taxpayer value.

‍Retail We enable cost-effective sourcing while enhancing supply chain resilience, helping retailers adapt to shifting market demands.

‍Hospitals & Aged Care We ensure compliance and cost optimisation in the procurement of essential medical supplies and services.

‍FMCG & Manufacturing We support scalable procurement strategies that drive operational efficiency and supplier innovation.

‍Achieve Procurement Success with Trace Consultants

‍At Trace Consultants, we specialise in helping organisations across Australia and New Zealand optimise their procurement strategies. Our Go-to-Market Strategy & RFx Support program is tailored to industry-specific challenges, ensuring organisations achieve cost efficiencies, compliance, and long-term value creation.Whether you're a government agency enhancing procurement transparency, a retailer optimising costs, or a healthcare provider balancing quality and compliance, we’re here to help.

‍Let’s Start Your Procurement Transformation

‍Procurement isn’t just a function—it’s a strategic enabler. By leveraging structured go-to-market strategies and expert RFx support, your organisation can unlock significant value and competitive advantage.📩 Ready to transform your procurement processes? Contact us today to discover how Trace Consultants can drive your success.

🔗 Visit Trace Consultants to explore how we can help you achieve procurement excellence.