What are the Difference between Indirect and Direct Procurement?
Procurement’s importance as a key business process has increased significantly in recent times. Originally procurement started as a way to integrate purchasing into supply chain management during a time when most large companies were struggling to manage their operational costs. In fact, the exact date of procurement’s ascendance can be dated to October 1983 when Peter Kraljic identified that purchasing must be a strategic implementation in an organization, rather than a simple tactic in their supply chain management process. Prior to this change, organizations had only considered procurement to be a sub-discipline of the supply management process. Over time, the result is the development of two overlapping disciplines within procurement: indirect and direct procurement. 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 po...
