Comparing SAP Ariba Sourcing Indirect and Direct Spend Sourcing

Objectives

After completing this lesson, you will be able to:

  • Compare SAP Ariba Sourcing and Direct Spend Sourcing

Sourcing Indirect Materials and Services

Sourcing Indirect Materials

Purchasing of goods or services not directly associated with the product manufactured.​

Indirect materials procurement focuses on the procure-to-pay cycle of goods needed to run a business. ​This process includes:​

  • Finding suppliers and negotiating pricing and contracts​
  • Sending purchase orders and receiving invoices
  • Monitoring spend​

Examples:​

  • Office supplies​
  • Cleaning services
  • Rent
  • ​Utilities
  • IT equipment

Direct Spend Sourcing Adds Industry Capabilities on Top of Sourcing

Direct Spend Sourcing

Purchasing of goods or services directly associated with the product manufactured. ​

Direct Materials Procurement focuses on the design-to-build cycle of product to be sold. ​

This process includes:​

  • Creation of a part list (BOM - Bill of Materials)​
  • Managing part and product lifecycle through the supply chain​
  • Collaboration with suppliers on future needs, quality, and pricing​​

Examples:​

  • Raw Materials
  • Direct Labor
  • Manufacturing Supplies

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