Introduction

In industrial value creation, purchasing has a dual responsibility: On the one hand, it ensures operational capability by supplying critical production goods. On the other hand, it makes a significant contribution to competitiveness through structured cost management and process optimization. While direct purchasing has been professionally managed as a key strategic element for decades, indirect purchasing remains methodologically underdeveloped in many companies.

This asymmetry is not only operationally inefficient but also poses risks regarding costs, transparency, and compliance. This article systematically analyzes both procurement categories, focusing on their respective challenges, control mechanisms, and optimization potential in an industrial context.

Summary: Direct vs. indirect purchasing

• Direct purchasing: Production-relevant materials – focus on security of supply, quality, price volatility.
• Indirect procurement: Equipment & services – often unstructured, high process costs.
• Challenges:
• Direct: Global supply chains, raw material prices, technical specifications.
• Indirect: Maverick buying, many creditors, lack of process integration.
• Possible solutions:
• Direct: Supplier development, TCO analysis, technology-oriented purchasing management.
• Indirectly: Centralization, single-creditor model (e.g. FACURA), digital platforms.
• Conclusion: Structured management of both types of purchasing creates efficiency, transparency and risk minimization.

1. Conceptual and procedural delimitation

Direct purchase

Direct procurement encompasses all materials and services that are directly incorporated into the final product or are essential for its production. These include, among other things:

• Raw materials (e.g. steel, plastics, chemicals)
• Production materials (e.g., electronic components, machine parts)
• Production-related services (e.g. contract manufacturing, material processing)

These factors are directly correlated with product quality, delivery dates, and manufacturing costs. In ERP systems, they are represented by structured material master data, bill of materials references, and long-term framework agreements.

Indirect purchasing

In contrast, there is indirect procurement – all goods and services that are not critical to productivity but are nevertheless needed for day-to-day operations:

• IT equipment, software licenses
• MRO items (Maintenance, Repair and Operations)
• Facility management, cleaning, vehicle fleet
• Consulting and training services
• Office supplies and consumables

This sector is characterized by high fragmentation, changing needs, and in many companies a decentralized procurement process without strategic control.

2. Strategic relevance in industry

Both purchasing areas are of great importance to industrial companies – but with different modes of operation.

Direct purchasing is closely integrated into the supply chain and production control. Errors in procurement have a direct impact on output, quality, and delivery capability. In many sectors of industry, the procurement costs of direct purchasing have a significant impact on manufacturing costs.

• Indirect procurement primarily affects process costs, the efficiency of internal processes, and compliance. Despite generally lower procurement volumes, its tax and legal impact should not be underestimated – especially regarding services, personal data, and country-specific regulations.

A modern strategic procurement management should therefore consider both fields in an integrated manner, with clear control models, differentiated methods and suitable digital tools.

3. Challenges in direct purchasing

Volatile markets and security of supply

The procurement of production materials is increasingly influenced by geopolitical tensions, price volatility, and demand management. This necessitates:

• Market knowledge and early warning systems
• Strategic risk management
• Diversified supplier portfolios (dual/multi sourcing)

Dependencies in global supply chains

Many companies are integrated into highly complex global supply networks. The challenge lies in managing both regional procurement risks (e.g., in China, Eastern Europe, Southeast Asia) and transportation and customs risks. Tools such as supply chain mapping and advanced planning systems are becoming increasingly important in this context.

Technical and quality requirements

Production materials are generally subject to strict specifications. Purchasing must be proficient in technical feasibility, auditing processes, and testing procedures – in close coordination with engineering and quality assurance.

4. Challenges in indirect procurement

Decentralized demand reporting and process breaks

In many companies, indirect purchasing occurs outside of defined purchasing processes – for example, through email orders or credit card purchases by individual departments. This leads to:

• Lack of transparency regarding the total volume
• Lack of budget control
• Increased accounting effort

Maverick Buying

Uncontrolled individual orders, often bypassing the purchasing department, not only create price disadvantages but also compliance risks – for example, in adhering to internal purchasing guidelines, data protection regulations, or tax documentation.

Fragmented supplier landscape

The large number of occasional suppliers in the indirect sector results in high transaction costs. Breaks in the communication between demand, ordering, and accounting lead to manual tasks, clarification issues, and delays.

5. Solutions for direct purchasing

Direct purchasing is the most heavily regulated and process-integrated area of procurement in industrial companies – but also one of the most cost-intensive. Its optimization requires a sophisticated interplay of supplier strategy, cost management, and technical integration.

5.1 Strategic supplier development and risk diversification

A key success factor is the proactive development of the supplier base. The goal is to increase both security of supply and negotiating power.

• Dual and multi-sourcing reduce dependence on single sources.
• Make-or-buy analyses help to weigh internal and external performance against each other.
• Supplier audits and scorecards enable a systematic evaluation and prioritization according to quality, cost and risk criteria.

Targeted development of strategic suppliers creates cooperation models that offer added value beyond the pure purchase price – e.g. through technical support, flexibility in logistics or joint innovation projects.

5.2 Systematically controlling raw material costs

In resource-intensive industries, material costs can account for up to 60% of manufacturing costs. Volatile prices in global markets necessitate professional commodity risk management.

• Use of price adjustment clauses in contracts, linked to commodity indices
• Conclusion of framework agreements with quantity-based pricing to reduce purchase price fluctuations
• Use of futures markets (e.g., for metals) to hedge prices

In addition, digital market databases (e.g. for steel, aluminum or plastic granules) are increasingly being used for trend analysis and decision support.

5.3 Total Cost of Ownership (TCO) instead of pure unit price focus

A purely price-oriented procurement approach falls short. Instead, all costs over the entire life cycle of a good should be considered.

• Acquisition costs
• Quality costs (e.g., testing effort, rework)
• Logistics costs (e.g. transport, storage)
• Operating costs (e.g., energy, wear and tear)
• Disposal costs

Especially with technical production materials, a higher investment in quality can lead to lower overall costs in the long term – for example through less waste, reduced machine downtime or simplified maintenance.

5.4 Integration of technical departments into the purchasing process

Technology and series production decisions are often made early in product development. Therefore, close collaboration between purchasing, engineering, and quality management is crucial.

• Cross-functional teams (purchasing – technology – quality) ensure that technical feasibility, cost targets and delivery capability are synchronized.
• Early Supplier Involvement (ESI) involves key suppliers as early as the development phase – e.g. for material selection or manufacturing optimization.

This practice reduces subsequent corrections and supports an economically and technically optimal part design.

5.5 Digitalization and process automation

• E-procurement solutions reduce media breaks and increase data quality.
• Forecast-based planning enables demand- and consumption-oriented procurement.
• Supplier portals improve communication, procurement planning and delivery schedules.

Furthermore, AI-based analytics (e.g. for price forecasting or supplier evaluation) supports informed decisions – an increasingly relevant tool in commodity-driven markets.

6. Solutions for indirect procurement

While direct procurement is strategically managed in many industrial companies, indirect procurement often remains operationally driven and fragmented. Yet, it is precisely here that significant potential lies for process simplification, cost savings, and minimizing compliance risks. Effective solutions are based on three pillars: structuring, digitalization, and governance.

6.1 Centralization and strategic management

First, indirect procurement must be separated from its often decentralized role and placed under the control of strategic procurement. The goal is company-wide standardization, particularly in the following areas:

• Supplier selection: Clear specifications regarding which suppliers (e.g., framework agreement partners or platform providers) may be used.
• Catalog and product range maintenance: Defining preferred products and suppliers, e.g. for office supplies, IT accessories or tools.
• Approval processes: Automated approvals depending on order value, product group or cost center.

Such control not only improves process quality, but also creates evaluability, transparency and budget discipline.

6.2 Supplier bundling and single-vendor model

A structural bottleneck in indirect procurement is the large number of occasional suppliers – resulting in high costs for vendor setup, verification, invoicing, and communication. The solution lies in consolidation through central service providers, for example, with a single-vendor model.

Example: FACURA

FACURA acts as the sole vendor in the ERP system, but handles procurement from any online shop or specialist supplier in the background. The process is incredibly simple:

• The buyer sends the link to the desired item or shop.
• FACURA handles ordering, payment, and invoicing.
• The customer receives a single, standardized invoice from FACURA.

Advantages:

• No need to create a new vendor account.
• Standardized document formats for invoices, delivery notes, and quotations.
• Full integration into existing approval and accounting processes.
• Purchase on account – no credit cards or prepayment required.

FACURA charges exclusively on a transaction-based basis (e.g., a 10–25% handling fee depending on the order value); there are no fixed costs, subscription fees, or implementation costs.

6.3 Digitization of ordering processes

A common mistake in indirect procurement: digital tools are only used for needs assessment, not for the complete processing. Modern solutions cover the entire procurement process – from the initial request to the audit-proof invoice.

• E-procurement platforms or punchout catalogs enable standardized ordering processes.
• Self-service portals for specialist departments increase acceptance and reduce queries.
• Integration into ERP or workflow systems ensures compliance and traceability.

The important point is that not every need must be handled via SAP or complex tools. Providers like FACURA enable process-compliant email orders that are nevertheless fully documented and processed correctly for accounting purposes.

6.4 Transparency, controlling and cost optimization

Transparency is essential for effective management: Especially in indirect procurement, it is crucial to systematically record and analyze expenditures. Key levers:

• Category-based analysis by product groups, end users, suppliers.
• Monitoring of maverick buying, e.g. by comparing purchasing guidelines and invoice data.
• Use of KPIs, such as: percentage of standardized orders, orders without interfaces, number of vendors per product group.

The introduction of central platforms demonstrably reduces process costs: Studies show that up to 40% administrative savings can be achieved compared to manual procurement – simply by eliminating redundant checks, simplifying invoice processing and reducing clarification cases.

6.5 Compliance and audit security

Compliance requirements are particularly high for services, personal data, or cross-site procurement. Standardized processes with defined audit and documentation steps are essential, especially regarding:

• GDPR-compliant service provider selection
• Tax documentation (e.g., in the case of reverse charge)
• Supplier declarations and certificates

Centralized models offer clear advantages here – both compared to in-house procurement by departments and compared to anonymous marketplaces.

Conclusion: Procurement as a strategic management tool

The distinction between direct and indirect procurement is not merely a classification criterion in practice, but a crucial management factor. Companies that analyze both areas in a differentiated manner, manage them specifically, and consistently digitize them create the conditions for:

• Increased efficiency in operational purchasing
• Increased transparency regarding expenditures and processes
• Improved risk management in the supply chain
• Clear responsibilities and compliance

Particularly in indirect procurement, there is often untapped potential. Those who strategically structure, standardize, and digitize this area not only unlock potential savings but also reduce operational risks and sustainably relieve the burden on the procurement team.