Procurement and purchasing are both widely used terms in the business world. Generally, they are referred to in the same way. People will talk about procurement if considering a purchase, for example, and they will often generally reference one as if it were the other. However, even though purchasing and procurement overlap in some important ways, they actually refer to two different types of interactions.
Procurement involves a lot more than just trading money for an item. It is meant to describe the acquiring of goods and services for a place of work overall. Working in procurement for a company involves following several steps to obtain all the items the business needs. For example, once an organization decides it needs a specific product, they must acquire a list of places that sell said product. If the company has an approved vendor list, they will most likely choose from said list. If not, however, they turn to purchase orders or sales representatives. A lot of qualifying must go into choosing a company to provide a product.
Before signing off on a product, however, a the business must research best prices and contract terms for their desired product. How far the company is willing to go to get a product is discussed in this stage, and vendors are considered from all angles. When the ordered product arrives at its destination, the business then must inspect it. They have the option to reject it if it somehow is not in concordance with the purchase order. Once the company finally accepts a purchase, they approve the invoice and pay the supplier. A payment must be filed away in purchase records for the company’s taxes and any future audits.
As you can see, purchasing is a subset of procurement, and the two are not mutually exclusive. Procurement is a process that touches every facet of a business, however purchasing itself just affects on department. When procuring a product, a business must make sure the company they work with supports the way they have carefully branded themselves. Businesses generally seek out other businesses that are like-minded, with the same values. Marketing is key, and every procurement is viewed as a step toward the company’s overall goals.
All in all, I would like to stress that procurement and purchasing should not be used interchangeably. The procurement process is a lot more in depth and should be handled as having an effect on the entire business.