Procurement is a tricky term often confused with purchasing. But in reality, they are both quite different. This document is for individuals interested in learning what the difference is between procurement and purchasing.

1. What Is The Difference Between
Procurement And Purchasing

2. People often use the
terms purchasing & procurement
interchangeably

3. But even though they sound
similar, they’re definitely different

4. Procurement
Involves
Selecting Vendors
Establishing Payment Terms
Strategic Vetting
Selection & Negotiation of Contracts

5. Procurement is concerned with acquiring
(procuring) all of the goods, services and work
that is vital to an organization.

6. Purchasing is a part of procurement

7. Procurement is considered a core part of any
organization’s corporate strategy

8. As a quick refresher, our friends
at entrepreneurial-insights.com have
published a particularly lucid explanation of
the facets of corporate strategy.

9. Facets of corporate strategy
Corporate
Strategy
Company Identity
Market Placement
Company Capabilities
Management Issues

10. Company identity attempts to address these questions:
• What does our company want to do?
• What does our company stand for?
• Does our company have any specific
ethical beliefs that will determine our
business model?

11. Market placement attempts to address these questions:
• Who are our customers?
• What do they want?
• What do they believe in?

12. Company capabilities attempts to address these questions:
• What are the strengths and weaknesses of
our company?
• Do our strengths support the long-term
goals of the company?
• How do we want to grow the company?

13. Management issues attempts to address these questions:
• Do we need to hire / develop talent
to lead the business to the goal we’ve
established?
• Does the company have the resources
(equipment, real estate etc.) needed
to support the long-term goals of the
company?

14. This is a great breakdown of corporate
strategy because procurement touches
each of these components

15. If your business is building (or has built) its identity
around an environmentally conscious ethic, than your
procurement strategy must reflect that decision

16. Customers are, without a doubt, attracted to the
philosophies and practices a business uses.

17. Steps in the procurement process
• Identification of Requirement
• Authorization of Purchase Request
• Final Approval of Purchase Request
• Procurement
• Identification of Suppliers
• Inquiries
• Receipt of the Quotation
• Negotiation
• Selection of the Vendor
• Purchase Order Acknowledgement
• Advance Shipment Notice
• Goods Receipt
• Invoice Recording
• 3 Way Match
• Payment to Supplier

18. Using purchase orders (especially those generated by an e-
procurement software solution) is critical, regardless of the
size of your organization. Don’t simply use your credits cards
and save the receipts. Don’t rely on emails.

19. The purchasing process
• Purchase Order Acknowledgement
• Advance Shipment Notice
• Goods Receipt
• Invoice Recording
• 3 Way Match
• Payment to Supplier

20. Purchasing, then, is a subset of procurement. And as
we’ve outlined, purchasing generally refers to buying
goods or services. Purchasing often includes receiving
items and payment as well.

21. Unlike the entire procure-to-pay cycle, the
steps explicitly related to purchasing should
not be tailored to suit the size and scope of
each individual business.

22. Remember! Purchasing is a process within
the overarching procurement process.

23. Conclusion:
Procurement deals with the sourcing activities, negotiation and
strategic selection of goods and services that are usually of importance
to an organization.
Purchasing, however, is the process of how goods and services are
ordered. It is usually described as the transactional explicit function of
procurement for goods or services.