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  • Direct buys materials go into your product; indirect buys what keeps the business running.
  • MRO lives in indirect, but many MRO parts are stocked and valued in SAP like any other material.
  • Day to day: direct is driven by planning and stocked receipts; indirect is requester-driven with service acceptance and cost postings.
  • Good basics win: clean master data, simple approvals, solid catalogs, disciplined receiving/acceptance, and clear rules for MRO storerooms.

What “Direct” and “Indirect” Mean for SAP Users

Direct procurement covers raw materials, components, and packaging that become part of a finished product. Miss a delivery here and production stops.

Indirect procurement covers goods and services that don’t go into the BOM but keep operations moving: MRO spares, safety gear, cleaning, office/IT, consulting, facilities work, and more.

Where MRO fits: MRO is indirect by purpose, but many MRO parts are managed like inventory with quantities, value, and planning in SAP. Think bearings, motors, gearboxes, belts, seals, sensors, filters. These can be stocked, cycle-counted, and issued to maintenance orders when used.

Two Typical Flows You’ll See

Direct flow

  • Planning (MRP) creates purchase requisitions from BOM demand, planned orders, or forecasts.
  • Buyers convert to POs using info records, contracts, or scheduling agreements.
  • Goods arrive, a goods receipt posts into stock; quality inspection, batch/serial capture as needed.
  • AP clears the invoice against the PO and receipt (three-way match).

Indirect flow

  • A person needs something: they shop a catalog or raise a free-text PR with specs/SOW.
  • Approvals route based on value or category.
  • The PO usually has an account assignment to a cost center, internal order, WBS, or asset.
  • For services, a service acceptance step replaces a classic “count the boxes” receipt.
  • AP matches the invoice to what was accepted; tolerances decide what passes straight through.

How stocked MRO behaves:

  • When you treat MRO parts as valuated stock, the upstream looks like direct: PO with no account assignment, goods receipt into a storeroom, inventory value goes up, and AP posts the invoice with a normal match.
  • The difference shows up at consumption time: you issue the part from the storeroom to a maintenance order (or cost center/asset). That’s when the cost hits maintenance or the asset, not at the time of purchase.

Master Data You’ll Touch (with MRO specifics)

Direct master data

  • Material masters with MRP, valuation, and sometimes QM views
  • BOMs drive demand; work centers/routings add timing
  • Info records, source lists, and (where steady) scheduling agreements
  • Supplier details for calendars, Incoterms, quality notes

Indirect master data

  • Non-stock materials or clean free-text descriptions and SOWs
  • Contracts with simple rate cards for frequently bought services and goods
  • Catalog content (internal or PunchOut) for requesters to self-select approved items
  • Supplier basics for banking, tax, and compliance

MRO master data that helps a lot

  • Material type: many teams use ERSA (Spare parts) for repairables and HIBE (Operating supplies) for consumables; use what your template supports, but be consistent.
  • Valuation: standard price or moving average—pick one and stick with it; use the right valuation class so stock hits the correct GL.
  • MRP settings: common for MRO are reorder point (VB), min/max, safety stock, or time-based planning; only use full PD MRP if you actually need it.
  • Storage locations: separate MRO storerooms from production components to keep counts clean.
  • Links to maintenance: use equipment/functional location BOMs so technicians can find the right spare quickly.
  • Serialization/batches where traceability matters (safety-critical spares, calibrations, shelf life).
  • Refurbishment flags if you repair and return parts to stock.

Documents and Item Categories You’ll See

  • Both sides use PRs and POs.
  • Direct commonly uses Standard lines to stock; also Subcontracting, Consignment, Third-party, or stock transfers.
  • Indirect leans on Services items for line-by-line service definitions and Limit items for not-to-exceed buys.
  • Account assignment
    • Direct to stock: usually blank on the PO (inventory).
    • Indirect consumables/services: K/F/P/A (cost center/order/WBS/asset).
    • Stocked MRO: PO to stock (blank). Later, issue to a maintenance order (or cost center/asset) when used.

Receiving and Invoicing: What Actually Happens

Direct and stocked MRO

  • Post a goods receipt to stock (101).
  • Capture batch/serials if needed.
  • Three-way match clears most invoices without drama.
  • When maintenance uses the part, issue it to the maintenance order (movement like 261 to order), a cost center (201), a project (281), or an asset.

Indirect consumables and services

  • For services, do a service entry/acceptance instead of a box count.
  • For non-stock items, post straight to consumption with the right account assignment.
  • Use clear tolerances so AP can auto-post clean invoices and only stop the messy ones.

ERS (Evaluated Receipt Settlement)

  • Great for stable categories (standard packaging, filters, fasteners) where receipt data is reliable.
  • Works for stocked MRO too, as long as quantity/price are well controlled.

Approvals and Controls That Help (and don’t slow you down)

  • Keep approval rules short and obvious—based on value and category. Too many layers just add delay.
  • Steer users to preferred suppliers and catalogs; it beats cleaning up free-text later.
  • Make budget owners see commitments early for indirect and MRO; nothing’s worse than a surprise.
  • Set invoice tolerances and reason codes so AP and buyers can process exceptions fast and leave a good audit trail.

KPIs That Matter

Direct

  • Supplier on-time/in-full
  • Stockouts, schedule hits
  • Quality defects, inspection cycle time
  • Purchase price variance and contract use

Indirect

  • On-catalog and on-contract rate
  • PR-to-PO cycle time
  • Invoice exception rate and resolution time
  • Maverick spend share
  • Requester adoption of catalogs

MRO-specific

  • Storeroom fill rate for critical spares
  • Stockouts that delay maintenance
  • Non-moving/obsolete spare value
  • Inventory turns for MRO
  • Reservation-to-issue time for maintenance orders

Simple Design Patterns That Work

Direct

  • Treat BOM accuracy and MRP settings as non-negotiable.
  • Use scheduling agreements when supply is steady; use contracts when timing varies but pricing is set.
  • Align with finance on GR-based IV and tolerances.

Indirect

  • Start with your top categories and suppliers; build a small, clean catalog first.
  • Write service specs that state what “done” looks like; attach SOWs when it’s more than a simple line item.
  • Use limit items for quick, low-risk buys with hard caps and short dates.
  • Default account assignments so requesters don’t guess; add simple checks to catch errors pre-approval.

MRO

  • Decide which spares are stocked and valued. If the part is used repeatedly or is critical, give it a material master and keep it in a storeroom.
  • Use reorder point or min/max for common spares; don’t over-engineer planning if consumption is steady.
  • Keep MRO storage locations separate from production components; it makes counts and reporting cleaner.
  • Link equipment/functional location BOMs so technicians can pick the right part fast.
  • For repairables, use refurbishment and consider serialization for traceability.
  • Review slow-moving spares quarterly and clear out or reclassify to avoid carrying dead stock.

Common Pitfalls and How to Avoid Them

  • Too many document types → harder training, more errors. Keep types few; use conditions and workflow to guide behavior.
  • Free-text overload → buyer cleanup and inconsistent data. Push frequent items into catalogs.
  • No acceptance step for services → invoice fights. Decide who accepts and what proof is needed (time sheets, photos, reports) before the PO goes out.
  • Loose supplier onboarding → late surprises. Keep a short checklist for tax, banking, insurance, and certifications.
  • MRO not clearly split between stocked vs. non-stocked → confusion on cost timing. Stock the repeatables; expense the true one-offs.
  • No cycle counting in the MRO storeroom → wrong balances and emergency buys. Put critical spares on frequent counts.

A Short Rollout Checklist You Can Use Now

  • Split spend into direct, indirect consumables/services, and MRO; pick a few high-volume or high-pain scenarios to fix first.
  • Clean the master data for those scenarios: materials, suppliers, contracts, MRO planning and valuation, catalog items, and service descriptions.
  • Publish a catalog starter set for the most common indirect and MRO requests; add category pages with short buyer tips.
  • Document approval rules on one page and show them where requesters actually start PRs.
  • Standardize account assignment defaults and validations for indirect; make sure MRO issues hit the right orders/assets.
  • Agree on invoice tolerances by category and share a one-pager with AP and buyers.
  • Train by role: requesters (catalog vs. free-text vs. services vs. limit), receivers (GR vs. service acceptance), storeroom clerks (issue/return, counts), buyers (exception worklists).
  • Stand up a simple dashboard for cycle time, exceptions, on-catalog rate, MRO fill rate, and non-moving spares. Review it on a cadence and clear blockers.

Closing Thought

Direct and indirect use the same rails in SAP, but they solve different problems. Direct keeps production on time. Indirect keeps the place running. MRO sits in the middle: it’s indirect by purpose but often managed as stocked, valued inventory so maintenance has what it needs when it needs it. Get the basics right—clean data, simple approvals, good catalogs, and a tidy MRO storeroom—and the rest of P2P gets a lot easier for requesters, buyers, receivers, storeroom clerks, maintenance, and AP.

If you have question on this or any other PortSAP Consulting blog please feel free to contact us at Blog@PortSAP.com. Or if you are looking for Top Quality SAP Consultants please feel free to contact us.

The author, Ray Hornbrook, has over 19 years of SAP functional and technical experience.  Ray started his career in SAP as a MM/PP Subject Matter Expert (SME) for a SAP implementation in 1998 and is now a Senior Level SAP Consultant.  Since Ray has worked both sides of SAP, business end user and IT professional, he is able to communicate effectively with both IT and Business team members. Having a background as an SAP business end user has helped Ray greatly in his consulting career.  The business background helps him better communicate with the business members of the team.  As well as helping bridge gaps in communication between the IT and Business team members.

To find out more about Ray Hornbrook please check out his LinkedIn profile by clicking HERE.

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