Comparing SAP Ariba Sourcing Indirect and Direct Spend Sourcing

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

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