Procurement or purchasing- Isn’t it the same thing?


If you are at least a little like me, landed in this specific profession more or less by strategy of Life rather than your own strategic choice, you have asked yourself this at least once , if you are not a native English speaker probably even more than once.

So let’s get back tot the basics. According to the Chartered Institute of Procurement and Supply ( the largest certifying procurement professional body in the world) Procurement is defined as the buying of goods and services that enable an organization to operate its supply chains, in a profitable and ethical manner.

So far so good, but what does that mean in the details?

Procurement activity is overseeing the steps of the complete procurement cycle, such as market analysis, sourcing, negotiation, contracting and supplier relationship management for goods, works and services, covering both acquisitions from third parties and in-house providers.

The process spans the whole procurement cycle from the identification of needs, through to the end of a services contract or the end of the useful life of an asset. It involves options appraisal and the critical “make or buy” decision.

So, is procurement different to purchasing?

Yes, procurement differs to purchasing in a number of ways.

The main difference is that procurement is a long-term approach to acquiring goods and services, while purchasing is the short-term direct purchasing of products and services.
Procurement involves sourcing suppliers, negotiating, contract management and supplier development to name a few, and purchasing is fulfilling the transaction only and is very much a reactive and transactional approach.

In other words, we could say Procurement is “just to buy”, while Purchasing is the complete process from figuring out what is needed, where to buy it from, negotiate the price, get it delivered and all the steps after that. The complete cycle as we call it.

Everyone can buy a product or a service, but that rarely makes them a buyer/procurement specialist- much rather just a shopper.
The real value-add created by you as a purchasing responsible/ buyer is in the complete procurement process, you may not do all the steps yourself in the organization, but there is for sure there is an influential relationship that you have on all elements of the procurement process.

If you want to know more on the topic you can find us here ………and we are more than happy to help you be the professional you want to be.


Referral:

How can we help? Competitive advantage for excellence in procurement.

How can I help?

© Copyright 2024 - All Rights Reserved