When it comes to procurement concerns, a company has two goals: maximize their profit and minimize their cost. Maximizing profits through production and selling of goods and services and minimize their cost by ensuring that all resources are used and monitored efficiently. However, because some costs are not easily seen, it is given less control and monitoring. Such as in the case of indirect spending which is discussed in this infographic.
- Direct spending refers to costs associated with procuring materials that are directly related to production. This can be easily seen, measured and controlled.
- Indirect spending is the expenditures for materials that are indirectly related to products such as office supplies, repairs, consultation, and a few administrative expenses.