Optimizing Procurement in the CPG Industry

Efficient procurement is the backbone of business growth in the consumer packaged goods and brand industry. It drives cost savings, ensures supply continuity and enhances quality. 

Yet, procurement, both direct and indirect, often faces challenges that limit its strategic potential.

Procurement Challenges and Integration

The Problem: Procurement is often involved too late in decision-making, reducing its ability to vet suppliers, assess capacity and align with broader business goals. This delay can lead to higher costs and inefficiencies.

The Solution: Early procurement involvement transforms outcomes. By collaborating with demand planning teams, procurement can ensure supply continuity and align supplier capabilities with forecasted demand. This partnership strengthens supply chains, minimizes risks and optimizes inventory levels.

For indirect procurement professionals focused on services like staffing or marketing agencies, early involvement also ensures alignment with organizational priorities, helping departments like HR or IT find the right-sized partners.

Indirect vs Direct Procurement: Understanding the Differences

Procurement spans two distinct categories:

• Direct Procurement: Involves sourcing core materials, such as ingredients and packaging, essential for production
• Indirect Procurement: Covers back-office services such as staffing, marketing agencies and maintenance (MRO)

Despite differences, both categories follow a structured, seven-step sourcing process requiring category-specific expertise. Indirect procurement often supports operational efficiency across departments, whereas direct procurement is closely tied to demand planning for production continuity.