Direct Procurement

Direct Procurement

Direct procurement is the process of acquiring goods or services from an external supplier. This type of procurement is usually done to obtain materials or services that are not available internally.

There are typically three types of suppliers that organizations source from: original equipment manufacturers (OEMs), contract manufacturers (CMs), and distributors. OEMs are the original creators of a product, CMs are organizations that manufacture products according to the specifications of another company, and distributors supply products from multiple manufacturers to retailers or other businesses.

When sourcing from an external supplier, organizations must first identify their need, create a procurement plan, issue a request for proposal (RFP) or request for quotation (RFQ), select a supplier, and then negotiate and execute a contract.

The direct procurement process can be complex, time-consuming, and costly. However, it is often necessary in order to obtain the goods or services that an organization needs.