What is the difference between direct procurement and indirect procurement?

Direct spend refers to purchases of goods and services that are directly incorporated into a product being manufactured. ... Indirect spend refers to purchases of goods and services that are not directly incorporated into a product being manufactured

The procurement system is the main means of communication through which the needs and requirements of the organization of all types and departments are provided. It is also the contact between the institution on the one hand and suppliers and contractors on the other. It plays a major role in providing supplies and in announcing tenders and establishing them.

Direct procurement is the act of acquiring raw materials and goods for production. These purchases are generally done in large quantities, acquired from a pool of suppliers at the best possible cost, quality and reliability. These purchases are made frequently and are necessary for key business practices, such as a baker acquiring flour to produce bread.

Procurement department is considered the back bone of any business. And direct procuremnet is a like a blood line. The differance between the direct and indirect procument is

Direct procurement is the act of acquiring raw materials and goods for production. These purchases are generally done in large quantities, acquired from a pool of suppliers at the best possible cost, quality and reliability. These purchases are made frequently and are necessary for key business practices, such as a baker acquiring flour to produce bread.

Indirect procurement is the act of purchasing services or supplies required to keep the day to day business alive. One way of classifying indirect procurement is that it does not add to a business’s bottom line. This includes things such as repairing equipment, buying office supplies or acquiring services.

 Without indirect procurement functions, businesses wouldn’t be able to operate in an effective fashion. Typically, indirect procurement includes somewhere from 15-27% of a company’s total revenue.

 

 

Direct Consumers directly purchase goods and services to manufacturer. Indirect Consumers not purchase goods and services to manufacturer, he purchase through any sub agents

Well said and explained by By Abdulmohsen Aljohani Warehouse Controller and I agreed.

I echo the words of Mr. Abdulmohsen that he answered.

Direct procurement is you doing the procurement and an indirect procurement is one done on your behalf by a third party

Direct procurement refers the purchase of rawmaterial for production, and indirect procurement is for the day to day requirements in material or services.

Direct Procurement Direct procurement is the act of acquiring raw materials and goods for production. These purchases are generally done in large quantities, acquired from a pool of suppliers at the best possible cost, quality and reliability. These purchases are made frequently and are necessary for key business practices, such as a baker acquiring flour to produce bread. If direct procurement stops functioning or encounters problems, companies are no longer able to manufacture their product and create revenue. Historically, direct procurement stems from manufacturing. Indirect Procurement Indirect procurement is the act of purchasing services or supplies required to keep the day to day business alive. One way of classifying indirect procurement is that it does not add to a business’s bottom line. This includes things such as repairing equipment, buying office supplies or acquiring services. Without indirect procurement functions, businesses wouldn’t be able to operate in an effective fashion. Typically, indirect procurement includes somewhere from 15-27% of a company’s total revenue

really interesting question, and thanks for asking.

 

much of what I learned as a civil engineer working in procurement field, this question would not have only one right perspective.

 

it dependes in whether you are referring to the process or the cost and which discpline you are, if you are the manufacturer, you would propable refer to the cost and define it as a process referring to the services and products that are directly or indirectly related to production of your goods.

 

if you are the contractor, you would refer to the process and define it as a process of which you are buying the services or products directly from the original source (direct) or through intermediate party (indirect).