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CIPS L5M6 Exam - Topic 3 Question 9 Discussion
Topic #: 3
A category which includes raw materials required in large quantities and high volumes is often known as what?
A Direct Category refers to spend on items that are directly linked to the production of goods or delivery of services. For manufacturers, this includes raw materials, components, and items required in high volumes that form part of the finished product. These categories are critical because supply disruptions or price volatility can have significant impacts on production and customer delivery. Conversely, Indirect Categories refer to goods and services not directly linked to production, such as cleaning services, IT systems, or office supplies. Effective management of direct categories often involves long-term supplier relationships, strategic sourcing, and risk management. Since they directly affect business continuity, procurement strategies must prioritise availability, cost stability, and quality. Category managers often use Kraljic's Matrix and forecasting tools to design robust sourcing strategies for direct categories.
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