The seven signs
Each is a quantitative threshold, not a vibe. Score yourself honestly.
- 1. PO cycle time above 8 business days (median)
- 2. More than 12% of POs require manual rework after issue
- 3. Vendor master has more than 8% inactive vendors
- 4. Top 10 categories handled by 3+ different request channels
- 5. Less than 60% of indirect spend has a contract on file
- 6. AP exception rate above 6% of invoices
- 7. No monthly reconciliation between negotiated and invoiced rates
What each sign actually costs
We modeled the financial impact of each signal across the dataset. Median annual cost per signal, for a 250-employee US company with $40M of indirect spend:
- Long PO cycle: $310k in late fees and rush premiums
- PO rework: $190k in AP and procurement labor
- Vendor master bloat: $120k in compliance + duplicate-payment risk
- Channel fragmentation: $480k in lost volume leverage
- Missing contracts: $620k in off-contract maverick buying
- AP exceptions: $230k in working-capital drag
- No reconciliation: $1.1M in evaporated negotiated savings
How to triage
Start with the signal carrying the largest dollar number. Most US mid-market teams should attack reconciliation first (#7) — it's high-impact, low-friction, and proves the program works internally before you ask for a bigger budget.