Direct materials are those purchased by a company for use in building or making the final product sold to customers to generate revenue. Typically associated with manufacturing companies, these components and materials - and the suppliers that provide them - have a direct impact on a company’s cost competitiveness, product quality, and market share.
While some direct material procurement needs are similar to those on the indirect side of a company, additional requirements include should-cost modeling, computer-aided design (CAD) drawing and bill of materials (BOM) inclusion in sourcing and contract management platforms, and logistics and transportation modeling and scheduling capabilities - especially where third party logistics providers (3PLs) are being used.
