Direct vs Indirect Procurement: What are the key differences?
Direct vs Indirect Procurement: What are the key differences?
The procurement function is one of the most critical aspects of business process planning. Based on the types of requirements, a business might see their procurement in two mainframes - Direct Procurement and Indirect Procurement.

Finding its roots in core manufacturing, direct procurement is the acquisition of raw materials and goods that are required for production. This speaks up for purchases made in bulk amounts for the best possible price and quality contracts.


With indirect procurement, things are quite different. Here, the indirect procurement team looks into the day-to-day functioning and requirements of the business process. This may include the services acquired from partners and suppliers like utilities, management, the software required for processes, marketing expenses, etc.


Based on the industry and internal process, there may be unique sets of core-regular goods and services for production purposes and, the timely service needs for day-to-day business and support systems, which frames a need for direct and indirect procuring priorities. In both cases, the focus is on strategic approaches towards long-term relationships and collaborations with the suppliers.


Read more about direct procurement and indirect procurement and cost-cutting measures in both niches by developing a strong organizational structure.