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Indirect procurement is the sourcing of goods and services not related to manufacturing for a business to enable it to maintain and develop its operations. The goods and services classified under the umbrella of indirect procurement are commonly bought for consumption by internal stakeholders (business units or functions) rather than the external customer or client.
Indirect procurement categories include, but are not limited to:
HR related services (recruitment agencies, training)
Facilities management and office services (telecoms, furniture, cleaning, catering, printers)
Utilities (gas, electricity, water)
Consumables (grease, oil etc.)
MRO (Maintenance repair and operations)
Capital Goods (Plant and machinery)
Fleet management
Fire extinguishers are an example of goods not for resale
The overarching classification of ‘indirect’ can vary from business to business. Increasingly, the distinction between a ‘direct’ cost and an ‘indirect’ cost can become blurred (as classic debate of what is Capex and Opex) when looking at such expenditure items, for e.g. Fleet and Transportation. Companies' senior executives are often responsible for agreeing and defining this classification for simplifying their own financial, accounting and reporting structures.
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