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mind-map - Coggle Diagram
mind-map
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Types of Purchase
Direct purchasing involves purchasing raw materials, parts, or finished products that will be used in the manufacturing process. This type of procurement is often done by manufacturing companies who need specific items to make their products.
Indirect purchasing involves purchasing goods and services that are necessary to run the company's operations but are not directly related to production. Examples include office supplies, maintenance equipment, and IT software.
Buying services is when companies outsource certain tasks such as marketing, legal work, or accounting instead of hiring full-time employees. This form of procurement can help businesses save costs while still receiving professional services.
Example
Direct Procurement includes raw materials such as metal for car manufacturing, cotton for clothing production, or ingredients for food processing.
Indirect Procurement covers areas like office supplies, software licenses, consulting services, cleaning services, and employee training programs.
Maverick spending
Definition: is essentially any spend that cannot be predicted or controlled and can have a very negative affect on a company’s supplier spend base and profitability.
Common areas of maverick spend: Marketing & Promotional materials, Travel & Expenses
Two types of maverick spend:
- The first type of maverick spend and most damaging
- The second type that is not -quite-as-bad
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Integration definition
Integration refers to the process of combining or coordinating different components, systems, or functions to work together as a unified whole.