Lapasar
Spend & Cost Management

Direct Spend

Also known as: Direct procurement

Direct spend is money spent on goods and materials that go directly into the products or services an organisation sells.

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For a manufacturer, direct spend includes raw materials, components and packaging — anything that becomes part of the finished product. It is usually high-value, tied to production volumes, and managed closely because it affects both cost of goods sold and the ability to produce.

Direct spend contrasts with indirect spend, which supports operations but does not go into the product. Direct procurement tends to be planned via bills of materials and demand forecasts, with a strong focus on supply continuity.

Frequently asked questions

What is direct spend?
Direct spend is money spent on goods and materials that go into the products a company makes or sells — raw materials, components and packaging for a manufacturer.
What is the difference between direct and indirect spend?
Direct spend goes into the finished product. Indirect spend supports the business but is not part of the product — things like office supplies, IT and services.

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