Back to Glossary

What is Direct Cost System?

Direct cost system is a method of cost calculation accounting for expenditure directly related to the production cost. It could be materials or labor that go directly toward the manufacturing of a particular product. Semiconductors required in the manufacture of vehicles are a good example, where the cost is not always fixed. Global supply chain volatility has proven to cause a massive fluctuation in the cost of semiconductors, which in turn have increased the manufacturing cost for most automakers.

The direct cost system also includes resources and materials, processes, individuals (such as employee salaries), or direct expenses (such as royalties to a patent holder). A direct cost requires a specific cost object in the organization that it can be attributed to, such as a particular project or product.

World's Leading, Unified Source-to-Pay Platform for Direct and Indirect Spend Management

GEP SMART is an AI-powered, cloud-native source-to-pay platform for direct and indirect procurement. GEP SMART offers comprehensive source-to-pay functionality in one user-friendly platform, inclusive of spend analysis, sourcing, contract management, supplier management, procure-to-pay, savings project management and savings tracking, invoicing and other related functionalities.

Learn More ‌ 

Next-Gen, End-to-End Supply Chain Management Platform for the Connected Enterprise 

GEP NEXXE is a unified and comprehensive supply chain platform that provides end-to-end planning, visibility, execution and collaboration capabilities for today’s complex, global supply chains. Built on a foundation of data, artificial intelligence and cognitive technologies, GEP NEXXE helps enterprises digitally transform their supply chains and turn them into a competitive advantage.

Learn More ‌