Direct Procurement

What is Direct Procurement?

At its most basic level, Direct Procurement, which is also known as Direct Spend Management, refers to the end-to-end process companies use to manage the procurement of direct materials – that is the materials, goods, and services that make up a product.

In practice, Direct Procurement is made up of a series of related processes that span the full lifecycle of a product and include internal and external stakeholders, such as those from Procurement, Engineering, Logistics, Accounts Payable, the Supply Chain Management team, as well as the suppliers that make up the supply chain.

For manufacturers, the Direct Procurement process typically begins with the New Product Introduction (NPI) process which includes product design, sourcing, quality, product launch and continues through production all the way to the products end-of-life.

Why is Direct Procurement Important?

Direct Procurement processes are critical to product success, and by extension the success of the organization. Direct Procurement, when successful, builds supply chain resilience.

To achieve resilience, procurement must ensure that product components are available at the right time, quantity, location, quality, price, and that the supplying companies abide by company policy, performs well, and is not risky. The nature of Direct Procurement is often complex, both in terms of the end-to-end process, technical nature of components, regional regulations & compliance, and global supply chain.