In SAP, indirect sourcing and indirect procurement refer to the acquisition of goods and services that are not directly related to the production or manufacturing process. Sourcing involves identifying, selecting, and contracting with suppliers, building relationships, evaluating supplier performance, and finding alternative sources of supply. Procurement, on the other hand, focuses on acquiring the needed goods and services, ensuring their flow within the organization, and running the supply chain process.
Direct sourcing and direct procurement, in contrast, involve procuring materials needed for production/manufacturing/processing from known suppliers with whom the organization has a good relationship or a long-term contract. In indirect sourcing, e-procurement solutions are used to find suppliers, which may or may not be in the organization’s database application. Bidding processes are initiated, and suppliers are selected based on criteria set by the organization, regardless of whether they are familiar or not. In indirect procurement, low-value consumable items and services are purchased, and the data is replicated to ECC/S4H.