Difference Between Purchasing and Procurement,
Hello, you may have heard the terms purchasing or procurement in supply chain management, especially if you are working in this field.
Today, we will try to explain the differences between purchasing and procurement. At first glance, these two concepts may seem the same.
However, there are some fundamental differences between them. Let’s explore them.
What is Procurement?
Procurement is more strategic than purchasing. It includes all processes related to acquiring the goods or services that a company needs.
The main purpose of procurement is not basicly to buy products from suppliers. Instead, procurement focuses on creating value through strategic sourcing and long-term supplier relationships.
Procurement activities usually include:
- Searching for and evaluating suppliers
- Negotiating contracts and prices
- Managing supplier relationships
- Risk management
- Cost optimization
In short, procurement focuses on long-term strategies and value creation for the company.
What is Purchasing?
Purchasing represents the operational side of procurement. Compared to procurement, purchasing is more focused on the day-to-day buying activities.
Purchasing activities usually include:
- Creating purchase orders (PO)
- Sending orders to suppliers
- Tracking deliveries
- Checking invoices
- Processing payments
Purchasing mainly deals with executing transactions and managing orders.
Important differences of them
| Procurement | Purchasing |
|---|---|
| Strategic process | Operational process |
| Focuses on supplier selection | Focuses on purchasing order |
| Long-term value creation for company | Short-term purchasing transactions |
| Supplier management | Payment and delivery management |
Conclusion
To summarize, you have learned the difference between procurement and purchasing. These two concepts may appear similar, but their responsibilities are quite different.
Procurement focuses on strategy, supplier relationships, and long-term value, while purchasing focuses on executing the buying process.
Although they are different functions, they cannot be separated from each other within an organization. Both play an essential role in effective supply chain management.
I hope everything is clearer now after reading this article.
Thank you very much for reading.
Berkay.
