Direct procurement refers to the process of acquiring goods or services directly from suppliers, without the involvement of intermediaries. The focus is on purchasing raw materials, finished goods, and other essential items that are needed to maintain a company's operations. The aim of direct procurement is to reduce costs, streamline the purchasing process, and improve the quality of goods and services received.
Indirect procurement refers to the process of acquiring goods or services that are not directly used in the production of a company's goods or services, but are required to support the company's operations. Examples of indirect procurement items include office supplies, maintenance services, and other services supporting operations. The focus in indirect procurement is on optimizing cost, quality, and delivery times, while also taking into account factors such as vendor management and risk management.
Service procurement refers to the process of acquiring services from external suppliers. Service procurement is different from direct and indirect procurement because it involves the acquisition of intangible goods, such as consulting services, IT services, or training services, rather than physical goods. Service procurement requires a different set of skills and processes than direct or indirect procurement, as it requires a clear understanding of the services being procured and the specific needs of the company. The focus in service procurement is on ensuring that the services delivered meet the requirements of the company and provide the expected value.
In summary, direct procurement focuses on purchasing essential goods, indirect procurement focuses on purchasing goods that support the company's operations, and service procurement focuses on acquiring intangible services.
