Indirect spend, a critical component of every supply chain procurement strategy, is any spend not directly included in the Cost of Goods Sold of a product or service (conversely, purchasing raw materials for manufacturing, for example, is known as direct spend). Indirect spend refers to expenses incurred for materials, services, and maintenance required to operate the business effectively on a day-to-day basis. In the same way, “direct spend” is the process of “direct procurement.”
Examples of indirect spend are office supplies, uniform rentals, travel, MRO, industrial supplies, site maintenance, and even janitorial services.