The materials are directly required to produce a finished product are called direct materials e.g., personal computer, hard drive etc.Direct materials are required to be available in the right place, right quantity and the right time. Direct materials are related to cost of goods, whereas an an indirect material does not determine cost directly.Indirect materials do not delay production normally.Based on the focus on value/cost and critical nature , there are many indirect materials which are categorized under general items.Direct materials can be further categorized under bulk purchase, critical and strategic items.
Keywords: procurement, direct materials, indirect materials etc.
There are some materials, which are used for the production of products. But, some materials and services are used as a support of the main production process. Although, the whole procurement process should consolidate orders to take advantage of economies of scale and quantity discounts.
After completion of supplier selection, contact making, product design etc., a buyer-supplier engages in a transaction, which is called procurement. After buyer places the order a supply chain must be ready to do this if the required materials not made in a factory. The process culminates in receiving the finished goods by buyer paying for the order.
Direct and Indirect materials:
There are direct and indirect materials. Both are required to procure. We can think about apparel manufacturers who need to buy fabric, accessories etc. for the production of apparels. But sometimes need to buy a personal computer, hard drive etc. also. The materials are directly required to produce a finished apparel are called direct materials and personal computer, hard drive etc. are categorized as indirect materials.