Purchasing is the set of functions associated with acquiring the goods and services that an organization requires. Establishing a good supplier relationship.Obtaining invoice approvals and fulfilling payment terms.Receiving goods and performing quality checks.Selecting the right supplier and negotiating effectively.Requesting proposals and evaluating quotations.Procurement is the process of identifying, shortlisting, selecting, and acquiring suitable goods or services or works from a third-party vendor through a direct purchase, competitive bidding, or tendering process while ensuring timely delivery of the right quality and quantity.Īn end-to-end procurement process consists of the steps listed below: Now, let’s dive deeper into the concept of procurement vs purchasing, and see how they differ from each other. If you're a procurement manager and are new to procurement, then here's a guidebook that will help you shine in your role. It is true that a few organizations prefer to use one term over the other, but failing to learn the key differences between purchasing and procurement can make an organization overlook key components that have the potential to break an organization’s bottom line.
But, if you ask the same question to a procurement officer of an enterprise, you’ll get a significantly longer answer as to how and why there’s a world of differences between purchasing and procurement. If you ask a layman about the difference, you may get a reply that purchasing and procurement are one and the same. But those two functions are actually quite distinct-in their intent, the tasks they cover, the people involved, and, most notably, what they accomplish. Procurement is often mistaken for purchasing, and the two terms are often used interchangeably.
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