Procurement, purchasing, sourcing, and supply chain are often used interchangeably. However, there are essential differences between them.
Procurement vs. Purchase: If procurement involves the purchase, you may wonder, what is the difference between procurement and purchase? The answer is that the purchase is the transaction itself, focusing on managing specific orders to meet the company’s needs. Procurement is a much broader and more complex set of processes, including establishing and maintaining supplier relationships. Another way to think about the difference between procurement and purchasing is that procurement takes a proactive approach that starts with analyzing the company’s needs. In contrast, purchasing is a reactive approach – simply focusing on getting what the organization has already decided it needs.
Procurement vs. Probing: Probing, like purchasing, is only part of the overall procurement process. Sourcing is an early stage of the procurement cycle. It includes identifying and evaluating potential suppliers of goods or services, negotiating terms, and selecting the suppliers best suited to the company’s needs.
Procurement vs. Supply Chain: Procurement covers one aspect of supply chain management. Procurement includes probing, obtaining, and paying for goods and services. Supply chain management also covers the logistics involved in receiving goods, such as shipping and warehouse management, turning purchased goods into products, and distributing them to customers.