On average, procurement employees spend 30 to 50% of their working time on tasks that do not require their expertise - collecting requests via email, manually entering data into systems, and following up on whether someone has finally approved a request submitted a week ago. This is what we consistently see in procurement process analyses conducted during ERP implementations.
Indirect procurement - office supplies, IT equipment, external services, subscriptions - is a category that, in most organizations, operates on a “somehow it works” basis.
The problem appears when the company grows. With 50 employees, email-based requests are still manageable. At 500, they become a source of chaos. At 2,000 - a recurring bottleneck that starts to block operations.
This article is a condensed version of what Aleksandra Rurarz-O’Malley and I will cover in detail during the webinar on March 31 at 10:00. If you want to see the full process live in Microsoft Dynamics 365 instead of reading about it, you can register here.
Why indirect procurement is hard to control
Production procurement has a clear structure: BOMs, framework suppliers, schedules.
Indirect procurement is inherently fragmented - each department buys different things, from different suppliers, at different price levels and frequencies.
In practice, it looks like this: marketing orders gadgets through a PDF form, IT sends requests via email, and someone from operations calls a supplier directly because it’s faster. Procurement often learns about half of these transactions after the fact.
This leads to a problem that is rarely quantified directly. McKinsey estimates that companies lose an average of 8 - 12% of indirect procurement value due to so-called maverick spending - purchases made outside established processes and contracts.
With an annual budget of PLN 10 million, this translates to PLN 800,000 - 1.2 million spent unnecessarily. When I present these numbers to clients, there is usually a moment of silence.
Three points where the process breaks down
Request submission
The first issue is the lack of a single entry point for purchase requests. Emails, calls, notes, Excel files - every department has its own method.
As a result, procurement staff spend time rewriting data into the system instead of negotiating with suppliers.
Procurement catalogs - both internal and integrated with supplier platforms (so-called punch-out) - solve this at the source. Employees select items from a catalog, prices are up to date, and suppliers are predefined. The request goes directly into the system without procurement involvement.
In Microsoft Dynamics 365, this functionality is part of the standard procurement module. Punch-out catalogs allow employees to “enter” the supplier’s website, build a cart, and bring items back into D365 with current pricing - not outdated price lists.
Approval workflow
The second bottleneck is the approval workflow - or the lack of it, or its oversimplification.
Two extremes are equally costly: everything goes to one person (bottleneck) or everything is auto-approved (no control).
A well-designed workflow decides what requires human attention and what can pass automatically. A purchase of office supplies for PLN 80 should not land on the CFO’s desk. A software license for PLN 40,000 should go through at least two approval levels.
Designing these thresholds with clients is often the moment when companies start thinking seriously about how procurement should actually work.
Order consolidation
The third issue is less visible but can generate significant operational inefficiencies.
When every request automatically becomes a separate purchase order, procurement teams handle hundreds of documents monthly instead of a few dozen. Each order means separate communication, invoices, and deliveries.
Consolidation - grouping multiple requests into a single order per supplier or category - sounds simple but requires well-defined system rules.
This is often the moment when clients realize how much unnecessary work is caused by the lack of this functionality.
Where automation starts and where control ends
This is a question almost every company asks when implementing procurement automation for the first time. The concern is valid: if the system approves orders automatically, who is responsible for budget overruns?
The answer lies in configuration, not technology. Automation does not replace decisions - it replaces manual handling of decisions that would be made the same way anyway.
If company policy allows office purchases up to PLN 100 per employee per month without approval, there is no reason for such requests to wait a day for manager confirmation.
The same applies to supplier communication after order placement. Tracking delivery status, reacting to delays, sending reminders - these are tasks currently handled manually in tools like Outlook.
AI capabilities in D365 are beginning to automate this area in ways that, just two years ago, would have required separate integration projects.
In practice? During the webinar on March 31 at 10:00, we will show the full process live - from request submission, through approval and consolidation, to automatic order dispatch and AI-driven supplier communication.
What to consider before implementation
Indirect procurement automation delivers results faster than most ERP projects - but only if the organization has clear answers to a few key questions:
- Who can submit requests and under what rules?
- What spending thresholds require approval and at what organizational levels?
- Which categories have approved suppliers and which remain open?
- How should off-catalog purchases be handled - and should they be allowed at all?
Without these answers, even the best system will simply replicate existing chaos - just in digital form.
It may sound harsh, but this is a conclusion that repeatedly proves true in implementation projects.
FAQ
Does indirect procurement automation require a large implementation project?
Not necessarily. For companies already using Microsoft Dynamics 365, the procurement module is included and mainly requires configuration - catalogs, workflows, and consolidation rules. Basic processes can usually be launched within weeks, not months.
How does the system handle purchases outside the catalog?
In D365, users can submit requests by category instead of selecting a specific product, including descriptions, justification, and attachments. These requests can follow different workflows, such as requiring additional approvals.
What happens after order approval? Does procurement still need to contact suppliers manually?
It depends on configuration. Orders can be sent automatically after approval. The next step - increasingly common in D365 implementations - is automating supplier communication using AI agents such as Copilot.
