Direct Procurement - Meaning and Importance

What Is Direct Procurement?

Direct procurement is the process of purchasing raw materials, goods, or resources that are directly related to the production which are utilized in core business operations.

Direct procurement involves acquiring vital materials that directly influence the final product and, consequently, have a direct impact on the company's revenue. For example, in the automotive industry, direct materials include the acquisition of steel, rubber, plastics, electronics, and other materials that go into building a vehicle.

Direct procurement provides a host of benefits including the establishment of long-term supplier relationships, optimizing costs, implementing robust quality assurance, and mitigating potential risks.