What is the difference between procurement and purchasing?

The difference between the above is that procurement is a logistical procedure and purchasing is a transactional procedure that is required during the transaction of products. Procurement focuses on methods of research, negotiating, and strategic planning. On the other hand, purchasing concentrates on the way products/services are to be obtained and how to coordinate the procedure of payment.

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Sourcing May 1st, 2021 views

What is the difference between procurement and purchasing?

The difference between the above is that procurement is a logistical procedure and purchasing is a transactional procedure that is required during the transaction of products. Procurement focuses on methods of research, negotiating, and strategic planning. On the other hand, purchasing concentrates on the way products/services are to be obtained and how to coordinate the procedure of payment.

Procurement and purchasing are two different methods of business but both work towards sourcing the required services and products.

Procurement vs Purchasing

Some tasks in the above field might appear similar but there are also differences.

Procurement: strategic process

  • Acknowledge the needs.
  • Check on suppliers available in the local as well as overseas market.
  • Take part in negotiating all the agreements.
  • Develop and maintain supplier connections
  • Work out ways to reduce the capital spending.

Purchasing: transactional activities

  • Obtain requisitions concerning purchase.
  • Understand the quotes supplied by the vendors.
  • Raise and manage purchase orders.
  • Keep an eye on the delivery of goods and services and manage the warehouse.
  • Deal and obtain payment from vendors.

These two often seem confusing and are used in place of each other. Sometimes a procurement officer is also referred to as a purchasing manager. He works towards recognizing the service providers who can buy goods and services for their organization. A procurement manager must have thorough knowledge while he deals with a client. He should have received the experience required in this field. A procurement officer works towards strategy development for the procurement of goods, checking and finding as well as the physical purchasing of goods and services.

The buyers, managers, or purchasers are responsible for acquiring, assessing the products, the shipment time, and the number of possible purchases. This should be done while adhering to ethics. Essentially the scope in buying is narrower compared to procurement. FCMG employs many buyers but just one or two procurement managers. Not only that procurement managers deal with the issues that may arise on the agreed contracts, the agreed standard of quality with the vendor.

Purchasing does not require major planning. It is not a difficult task to hire a buyer but some work is needed while hiring a procurement agent. A procurement officer, not only manages risks and analysis but also leads and controls. He advises his organization in processes related to the obtaining of goods and services, the code of conduct on how to ensure efficient procurement of a product. When it comes to buying and sourcing required goods, the buyer is required. However, activities before that are not their responsibility. Some organizations consider them to be the same.