Indirect Categories

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Indirect categories

Indirect categories in procurement refer to the goods and services that are not directly involved in the production or delivery of a company’s core products or services but are essential for its day-to-day operations. These purchases are often referred to as indirect spend.

While direct categories are directly linked to the production process (such as raw materials or components), indirect categories support the business functions but don’t directly become part of the final product.


Examples of Indirect Categories:
  • Office supplies (e.g., paper, pens, and printer ink)
  • IT services and software (e.g., cloud subscriptions, software licenses, hardware)
  • Facilities management (e.g., janitorial services, maintenance)
  • Travel and logistics (e.g., airfare, hotel stays)
  • Marketing and advertising services
  • Professional services (e.g., consulting, legal services)
Key Characteristics:
  • Non-production-related: Indirect spend doesn’t contribute directly to manufacturing or service delivery.
  • Often more complex to manage: There are typically more suppliers involved, and spend is spread across various categories.
  • Can be a significant portion of total spend: For many companies, indirect spend can account for a substantial amount of the overall budget.

Managing indirect categories effectively can lead to cost savings, better supplier relationships, and improved operational efficiency.