Direct vs Indirect Sourcing
While direct procurement focuses on securing supplies that are processed and delivered to customers, indirect procurement deals with the supply of goods and services required to maintain internal operations.
Direct categories are characterized by complex specifications with a low number of qualified suppliers and focus on Total Cost of Ownership (TCO). Direct procurement requires careful pre-qualification and more advanced e-auction types and/or functionalities.
Indirect categories are characterized by standard specifications with a high number of qualified suppliers in a strong competitive environment and focus on costs. The need for pre-qualification is low, so the buyer can often move straight into a Reverse eAuction with ranking enabled, which often generates high savings.