Purchase vs Procurement

Difference Between Purchase vs Procurement

Most of the people commonly use the terminology procurement and purchasing interchangeably, but despite their similarities, they do have their own meanings and are different. We will try to clarify any sort of confusion on the difference between purchasing vs procurement.

Purchase

A purchase will generally be referred to simply 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, they are:

• Purchase Order (PO) Acknowledgment
• Advanced Notice of shipment
• Receipt of Goods
• Recording of Invoice
• Three-way matching
• Payment to the supplier

Procurement

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. 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

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.

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