In analyzing procurement activity of organizations in the manufacturing or process industries, the total spend is often classified into two main categories: Indirect and Direct spend. Some analyses break out Capital Spend as a 3rd category. MRO Spend is a sub-category of Indirect Spend, referring to purchases of products, services and supplies for plant, facility and production equipment maintenance, repair and operations. Direct spend refers to purchases of materials and services that are directly incorporated into a product being manufactured for sale. Examples include raw materials, subcontracted manufacturing services, components, hardware, etc.
Indirect spend refers to purchases of goods and services that are not being incorporated into a product that is being manufactured for sale. This is all goods and services needed by an organization to conduct its business; such as computers, safety goggles, printed forms and office supplies, furniture, machinery and equipment, gas, water and electricity, janitorial services, communications services, marketing, travel and other administrative, technical and professional services as well as the aforementioned MRO products, services and supplies.