Procurement Vs Purchasing

Procurement is a broader function whereas Purchasing is a small subset of the Procurement function.

Procurement refers to the process of identifying, shortlisting, selecting, and acquiring suitable goods or services from a third party vendor through while ensuring timely delivery in the right quality, quantity and price & extends to Inventory Management and Waste disposal as well. Whereas Purchasing includes activities like ordering, expediting, receiving, and fulfilling payment. In general, for non-critical items Purchasing can identify and select vendors as well.

So, Procurement have activities before, during and after Purchasing.

Procurement covers study and recognition of need to find requirement pattern to improve specification and forecasting whereas Purchasing focus more on fulfilling current requirement. We can say Procurement activities are more proactive and Purchasing is reactive or transactional.

Procurement puts more importance on an item’s value than its cost whereas Purchasing tends to focus more on the item’s price.

Sourcing is the process of evaluating suppliers, negotiating supply contracts and managing the performance of suppliers.

Strategic sourcing is the continuous procurement process of discovering, prioritizing, improving, and re-evaluating sourcing activities.

Supply Chain is a further broader term, that covers everyone & everything involves in getting our product in the hands of a customer.

Supply Chain Management is the management of Supply Chain that involves the active streamlining of a business’s supply-side activities to maximize customer value and gain a competitive advantage in the marketplace.

Logistics Management is that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverses flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers’ requirements.

Logistics Vs Transportation: The key different are that logistics deals with the integration of storage, transportation, handling, and packaging of goods while transportation deals with the function of moving products or individuals from one location to the next.

Supply Management as the identification, acquisition, access, positioning, and management of resources and related capabilities an organization needs or potentially needs in the attainment of its strategic objectives. Supply Management is planning and acquiring the current and future needs of an organisation via Strategic Orientation, Process driven approach, Cross-functional groups and Supply Base Management.