Solution

5.0 Tools and Technique to Map Categories of Direct and Indirect Expenditure

5.1 Definition of Terms

An expenditure is identified by Chen et al. (2020) as the overall costs used to cater for a specific spend area. Hence, expenditure is incurred either during producing and frequent business operations.

For the direct expenditure, Delke et al. (2023) these entail “payments made against a department’s account for the expenses which do not require a purchase order”. For example, in Oxy, raw materials used, machinery and mechanical parts rely on their manufacturers and sales of products or services. This is from the source or organisation offering them. In Oxy organisation, direct expenditure is used to source the medicines, protective equipment and logistics. The indirect expenditure on the other hand entail spending to source products and services critical for day to day organisation practice. As summarised in figure 7, the indirect expenditure examples include the office furniture, training sessions, office supplies and traveling expenses;

Figure 1:Oxy Organisation summary of indirect expenditures

Source: Oxy organisation expenditure

Therefore, considering the different direct and indirect spend areas, the direct expenditure have a direct relationship with production of particular products and services (Neri et al., 2021). Besides, indirect procurement/sourcing strategy is essential to assist success in business activities of an organisation in line with benefit accrued from them. A summary of this comparison is illustrated below;

Table 1:Oxy organisation direct and indirect expenditures summary

5.2 Comparing and Contrasting different Tools and Techniques

The identified tools identified for this report analysis is STEEPLED technique and situational analysis. As evidenced in CIPS (2023b), the relevance of this is to discover, evaluate, organise and track entire external factors and risks. This tool put into account of social, technology, economy, environment, politics, laws, ethics and demographics. For indirect and direct Oxy organisation HS&E sourcing, a summary of their STEEPLED analysis is shown in table 3;

Table 2:Summary of the STEEPLED Analysis

In conclusion, considering factors such as social, changing customer preference on HSE impact on demand and supply hence variation of the costs. Also, with technology increase, more modern HSE systems are available with increased competition amongst the suppliers hence gaining in value for money. In Oxy organisation, the COVID-19 pandemic prevalence has increased need for more HSE and demand hence increasing expenditure value used. Need for green policy in Oman inform current Oxy organisation increase in budget for HSE procurement with positive politics increasing the competitors engaged. This is with ethical practice and increased generation Z and millennials increasing the need for involving different suppliers groups as part of their active operations.

5.2.1 Situational Analysis

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