Difference Between Purchase vs Procurement
A purchase will generally be referred to simply as buying services or goods. Purchase mostly includes payment and receiving as well. There are fundamental or most basic steps of purchasing the goods or services and it should be employed frequently as a best practice in all the businesses. Procurement is a broader concept and in fact, it includes purchasing as its part. Procurement is comprehensive, and this will generally include everything from selecting a supplier or the vendors until the negotiation of those contracts. All services or goods that are used by the firm or the company should be procured. Purchasing is merely a section of this whole process, and it will involve payment to the other firm or the company for services or goods.
Purchase
The steps involved in purchase are:
- Purchase Order (PO) Acknowledgment
- Advanced Notice of shipment
- Receipt of Goods
- Recording of Invoice
- Three-way matching
- Payment to the supplier
Procurement
The steps involved in procurement are:
- Identification of the requirement
- Authorization of the Purchase Request
- Approval of the Purchase Request
- Procurement
- Identification of Vendors
- Inquiries or Receipt of the Quotation
- Negotiation of the contract
- Selection of the Supplier
- Purchase Order (PO) Acknowledgement
- Advanced Notice of Shipment
- Receipt of Goods
- Recording of Invoice
- Three-way matching
- Payment to the supplier
Head To Head Comparison Between Purchase vs Procurement(Infographics)
Below is the top 5 difference between Purchase vs Procurement
Key Differences Between Purchase vs Procurement
Both Purchase vs Procurement is popular choices in the market. let us discuss some of the major Difference Between Purchase vs Procurement
- The key difference between the two: Procurement, as stated earlier, is a broader term which includes designing, processing, sourcing, negotiating and fixing standards, whereas purchase is a simple and a concise term which shall incorporate providing of the money for products or the goods. It can be concluded that purchase is one of the aspects of procurement.
- Another key difference between Purchase vs Procurement is the fact that purchase is considered more of a casual and an informal term, to the flip side procurement will be considered as a more of a formal business term.
- A purchase is a type of process that we partake every day. We would go out and purchase the stuff we want, whether the stuff is cheap or small and expensive or big. However, to the contrary, the term procurement will be mainly used in the corporate or say in the business.
- Purchase or buying is an action and hence it is a verb whereas procurement is a noun to the contrary.
Purchase vs Procurement Comparison Table
Below is the 5 topmost comparison between Purchase vs Procurement
| The Basis of Comparison Between Purchase vs Procurement |
Purchase |
Procurement |
| Basic Definition | Purchasing is a simple and concise term that will incorporate providing money for a product or goods. It can even be said that purchasing is a small and one of the aspects of procurement. | Procurement encompasses end-to-end supply chain management strategies which include negotiating contracts, sourcing, and acquiring services or work from external sources, goods, raw materials, then it will follow through to make sure contracts will be fulfilled according to the terms of the contract. The goal or the objective of the procurement are spending control, cost savings, and workflow efficiency. |
| Context | A simple and concise term that will incorporate giving the money for a product or goods as stated earlier. | A broader term that will include designing, processing, sourcing, negotiating and fixing the standards. |
| What it incorporates | Purchasing term generally will Incorporate purchasing or say buying of goods or an object, i.e. paying the money against the goods or the object. | Procurement generally will Incorporate the aspect of specifications development, administration of a contract, supplier market research, marketing, negotiation, value analysis, buying activities, and control of the inventory, the traffic, receiving and the stores. |
| Is it inclusive | Purchasing is a subset of the process of procurement. | Procurement includes the term purchasing as part of its process as explained above. |
| Few Examples |
|
|
Conclusion – Purchase vs Procurement
Because the purchase is a kind of process within the overarching process of the procurement, both the purchase of the term vs procurement is commonly used as interchangeably. In the world of the business, the practice of using the same terminology in either printed materials or in the conversation is a routine task, although it is often perplexing, and it must be avoided. Procurement will deal with the negotiation, the sourcing activities, and the strategic selection of services and the goods that are usually of more importance to an entity. Purchasing is the process of how services and the goods will be ordered. Purchasing can usually be defined as the transactional function or activity of procurement for services or the goods.
A procurement strategy will generally seek to streamline those operations by defining every aspect of the supply chain management and setting the protocols for the purchase requisition, approval process, automated spend, and the most optimal delivery options.
Where a purchase will begin and will end with the acquisition of services and the goods, procurement is an ongoing and continuing detailed design function or the process which makes informed purchase decisions which are based upon the available data, and that should be kept up to date. The purchasing department will continually seek and will monitor in order to improve and optimize the supplier relationships, forge connections, and will also try to find out the ways to lower supply chain management cost and further minimize the losses of the entity.
4.8 (2,629 ratings)
View Course
Recommended Articles
This has been a guide to the top difference between Purchase vs Procurement. Here we also discuss the Purchase vs Procurement key differences with infographics, and comparison table. You may also have a look at the following articles to learn more.
