What is the Difference Between Purchase and Procurement?
🆚 Go to Comparative Table 🆚The main difference between purchase and procurement lies in their focus and scope. Here are the key differences between the two:
- Focus: Purchasing is more transactional, focusing on ordering, receiving, and paying for goods or services. Procurement, on the other hand, is a broader and more strategic process that includes purchasing but also involves identifying company needs, selecting suppliers, establishing payment terms, and managing supplier relationships.
- Scope: Purchasing is a subset of procurement and is more short-term and reactive. Procurement is an umbrella term that encompasses purchasing and other activities, such as sourcing, contract negotiation, and supplier performance evaluation.
- Strategic vs. Transactional: Procurement is a strategic process that aims to create long-term value and lower costs throughout the purchasing process. Purchasing is more transactional, dealing with the buying and receiving of goods or services.
- Managing Supplier Relationships: Procurement includes managing supplier relationships, while purchasing primarily focuses on buying goods or services.
In summary, purchasing is a part of the procurement process that deals with the transactional aspects of acquiring goods or services. Procurement is a broader and more strategic process that includes purchasing but also encompasses other activities to ensure long-term value creation and cost reduction.
Comparative Table: Purchase vs Procurement
The difference between purchase and procurement lies in their focus and approach. Procurement is a strategic process that involves sourcing, negotiation, and selection of goods and services, while purchasing is a transactional process that focuses on ordering and acquiring goods and services. Here is a table summarizing the key differences between procurement and purchasing:
| Aspect | Procurement | Purchasing |
|---|---|---|
| Focus | Strategic | Transactional |
| Activities | Sourcing, evaluating suppliers, negotiating terms and conditions, building and managing supplier relationships, performing cost savings and profit margin analysis | Identifying needs and requirements, raising purchase orders, arranging payment, receiving goods and services, and maintaining proper documentation |
| Goals | Fulfilling a specific business need, risk mitigation, lowering costs, and contract compliance | Ordering goods and services, lowering order costs, and ensuring smooth daily operations |
| Long-term vs. Short-term | Long-term, holistic approach | Short-term, transactional-based approach |
In summary, procurement is a more strategic process that aims to fulfill specific business needs and focuses on long-term goals, while purchasing is a transactional process that deals with the immediate needs of the organization and focuses on short-term goals.
- Procurement vs Purchasing
- Acquisition vs Procurement
- Sourcing vs Procurement
- Purchase vs Buy
- Acquire vs Procure
- Contract vs Purchase Order
- Invoice vs Purchase Order
- Public vs Private Procurement
- Purchase vs Acquisition (Method of Accounting)
- Proactive vs Reactive Purchasing
- Point of Sale vs Point of Purchase
- Vendor vs Supplier
- Merger vs Acquisition
- Sales Ledger vs Purchase Ledger
- Brought vs Bought
- Sale vs Hire Purchase
- Acquire vs Obtain
- Price vs Cost
- Supplier vs Distributor