Procurement vs Purchasing

Procurement vs Purchasing

It’s a question you’ve probably been asked before, and when it comes down to it, the definition of procurement vs purchasing can sometimes be a difficult one to explain. Thankfully the Procurehere blog is here to help shine a little light on this sometimes confusing case of mistaken identity.

The ability of procurement professionals to explain the strategic value of their function relies on being able to inform others of what that function entails. The better that we’re able to evidence what we do, the greater the support we receive in delivering on that vital function.

When it comes to that distinction between purchasing and procurement, it’s all about defining the relevant borders of operation.

Procurement is about strategy

Procurement is a strategic function that’s vital to the success of a business

Procurement is a strategic function that’s vital to the success of a business. That function includes vendor selection and sourcing, negotiation of terms and contracts, as well as the ultimate purchasing of goods.

Procurement isn’t simply about identifying and acquiring the essential goods and services required for operations, it’s about designing the strategy to ensure they are acquired in a secure, sustainable, cost-effective way that works to meet the goals of your business.

Purchasing is about buying

Purchasing is an important step of the procurement process, but it’s ultimately just one part of the overarching strategic function.

Purchasing summarises the stage of procurement that involves the budgeted acquisition of previously identified goods and services. That means working to verify and complete payments on a contract that’s already been agreed as part of the wider procurement strategy.

Understanding the difference

As part of the overall procurement function, it’s easy to see how purchasing and procurement are often confused. As a procurement professional, it’s equally important to be able to demonstrate those differences to relevant stakeholders. The ability to emphasise the strategic role of procurement in business operations means being able to position the function in a way that best promotes positive business results.

Procurement isn’t just a straight up purchase. It requires detailed market understanding, complex negotiations, positive relationship management and a comprehensive understanding of the business environment alongside the market for relevant goods or services.

The importance of procurement vs purchasing

Informed understanding is key to the work of any procurement professional. Powerful e-procurement platforms like Procurehere may provide a new avenue by which that understanding can be implemented, but it’s the unique business insight of procurement professionals themselves that often provide the key determination of success.

Purchasing is an important part of the procurement process, but procurement itself goes far beyond that one step. It is a strategic journey built on experience, and steered by informed decision making.

Being able to explain the distinction between procurement and purchasing is vital. It provides an avenue for even greater discussion about the strategic importance of the procurement function. From sustainable sourcing to sustainable profits, procurement goes far beyond a simple of act of purchasing – it’s a strategic foundation for success in any business.

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