Difference between Purchasing,Procurement and Supply Chain

rainbow

New member
Re: Difference between Purchasing,Procurement and Supply Chain

What is the difference between Procurement, Purchasing and Supplychain.
Dear friend,

Supply Chain is a system of organisation with different activities whose final goal is purchasing, inventory management, consumer service. In brief, supply chain helps an end user to get a product or service from the manufacturer is a systematic fashion. Purchasing and procurement are part of suppy chain management and they are similar terms that are commonly used in the field of supply chain. There is no difference between these terms.
 

TopLink

Forum Founder
Staff member
Re: Difference between Purchasing,Procurement and Supply Chain

Dear friend,

Supply Chain is a system of organisation with different activities whose final goal is purchasing, inventory management, consumer service. In brief, supply chain helps an end user to get a product or service from the manufacturer is a systematic fashion. Purchasing and procurement are part of suppy chain management and they are similar terms that are commonly used in the field of supply chain. There is no difference between these terms.
I would only add that Procurement is generally thought of as being more strategic. i.e. Sourcing suppliers, setting up and managing supplier agreements, negotiating pricing / contracts and the like.

Whereas Purchasing tends to be regarded as the day to day activity of 'buying'. i.e. buying from suppliers, based on the pricing / terms set up by the procurement function.

In smaller businesses, the two are often the same thing.
 

PatriciaGuarnieri

Forum Moderator
Re: Difference between Purchasing,Procurement and Supply Chain

Hi,

I fully agree with TL. Besides that, the SRM - Supplier relationship management, is an activity of Procurement/Purchasing and it is responsible for decide and plan about some issues such as: what level collaborate with each supplier, with which suppliers maintain close relationships and how to share resources and information. It is a very strategic activity in SCM.

Kind regards,

Patricia Guarnieri
 

TopLink

Forum Founder
Staff member
Re: Difference between Purchasing,Procurement and Supply Chain

I think the definitions will always vary depending on which part of an organisation you are sitting in......

I know many people in procurement for example, who do not see that function as a sub set of Supply chain at all! In fact they are horrified by the idea. Their view is often that it is on the same level as Supply Chain reporting in directly to the CEO. In most businesses that would certainly not be the case. Though in some Government organisations, given the importance of procurement (huge spend) that might indeed make sense.
 

alan123

New member
Re: Difference between Purchasing,Procurement and Supply Chain

I agree both the terms procurement and purchasing are the part of supply chain and supply chain is well explained above, it is a term which includes many types of processes in it.
 

graduatejade

New member
Re: Difference between Purchasing,Procurement and Supply Chain

It is the info I need. The comments above are very helpful!
 

silliker

Banned
Re: Difference between Purchasing,Procurement and Supply Chain

Procurement is concerned with the overall gathering of resources, while purchasing is the specific act of acquiring something by paying money for it. Purchasing is one form of procurement
 

CGN_Associates

New member
Re: Difference between Purchasing,Procurement and Supply Chain

Procurement: When an external source is used to acquire goods or services required to meet the requirements of an organization, it is referred as procurement. In addition to cost; quality, quantity, time& location are additional factors while deciding on procurement. Procurement typically includes Expediting, Supplier Quality check, and Traffic and Logistics (T&L) in addition to Purchasing.

Purchasing: Purchasing is a subset of procurement. It basically refers to acquiring goods and services required to meet the needs of organization. The sourcing can be done either form an internal source or an external source.

Supply chain: As per the council of supply chain management professionals, Supply chain is the planning and management of all the activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers.
 

MuddyPoultry

New member
Re: Difference between Purchasing,Procurement and Supply Chain

I was always confused about the difference between the three. This clears things up nicely!
 

Bobby JOE

New member
Re: Difference between Purchasing,Procurement and Supply Chain

Purchasing and procurement the two a just separated with a thin line tho procurement stretch as step of contract signing , from supply chain both are games played within it depending on the perspective you take towards each of them.
 

Corzhens

Member
Re: Difference between Purchasing,Procurement and Supply Chain

Purchasing versus procurement. Over here, when we say purchasing that means we have to buy the needed supplies so a bidding process is in hte offing. For procurement it can be purchasing too in a way but it is more of an ordering system to a supplier that has a contract with the company.
 

nana

New member
Re: Difference between Purchasing, procurement and supply chain

Re: Difference between Purchasing, procurement and supply chain

Simply, purchasing is an operational means of obtaining goods at all cost by all means,but procurement is a strategic process of acquiring goods whereas supply chain is the organization of the process, information and resources to obtain goods and services.
 

Corzhens

Member
Re: Difference between Purchasing, procurement and supply chain

Re: Difference between Purchasing, procurement and supply chain

Simply, purchasing is an operational means of obtaining goods at all cost by all means,but procurement is a strategic process of acquiring goods whereas supply chain is the organization of the process, information and resources to obtain goods and services.
May I add that purchasing is actually buying so you need to pay in exchange of the goods that you acquired. Procurement is getting the goods regardless if you had paid for it or you got it for free. Just like the sand that is delivered to the hardware for construction supplies, they procure the sand from the seashore but it cannot be said that they purchased it for they got it for free. That is just one example on how to differentiate purchasing from procuring. It is just the proper use of words.
 
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