Procurement activities in an organization can typically be split into two – direct spend and indirect spend.
Direct Procurement deals with the purchase of materials and services needed for the manufacturing process of the company. For example, an Automotive company could source steel or electronics, or even powertrain components. It has a direct impact on a company’s profit, customer satisfaction, and overall performance.
Whereas, Indirect Procurement involves the purchase of goods and services needed for the day-to-day operations of the company. It ensures that the internal needs of the company and its employees are met. Typical examples are stationery, computers, services such as housekeeping or security etc.
