Purchasing vs. Procurement: What’s the Difference?

Purchasing vs Procurement
Posted by Ivy Montgomery on 12/17/2013

To some, there is literally no difference between purchasing and procurement. It’s all semantics. To others, there’s a world of difference – and so you better make sure you use the terms correctly. Both of these perspectives (and others) were found in this recent discussion of the Procurement Professionals group on LinkedIn.

So what is the difference between procurement and purchasing? We’ll let you be the judge of that, but here were a few answers (verbatim, so please excuse the typos and grammar) that caught our attention. Take a look:

“Purchasing is mainly used in a wholesale environment (external customers), whereas Procurement is mostly used in a production environment (internal customers). Both require mostly long term agreements and quality suppliers/vendors. The wholesale operations have a wider perspective to my experience because they tend to do more sourcing. More entrepreneurial.”

***

“In my point of view, ‘Procurement’ process takes into account factors such as the cost over the life of the good or service, and the quality necessary to meet users' requirements.

Purchasing refers to the specific activity of committing expenditure and which tends to focus on issues of price rather than of value."

***

“Procurement will only responsible for Bid evaluation Tender process and cost control, Project management, Monitor the purchasing activities, communication and administration between one department to other department. He/She will responsible for the bid opening and decision maker when teotiatndering. Purchasing Dept. will work under the controlling by Procurement Manager. Etc

Purchasing department will take care of buying materials, cost control, find good vendor/supplier and negotiate the price, follow the purchasing procedure and regulation, work in team, communication with Accounting/Finance Dept and Procurement to make sure the prices are correct.”

***

“Procurement is the complete process or a cradle to grave approach. It starts with the identification of a need and continues until either the need no longer exists (the need is not filled and goes away) or the need has been filled and the contract leading to the meeting of the need is closed. Purchasing is the actual process of contracting for meeting of the need.”

***

“Strategic vs. Transactional.”

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“I appreciate every ones attempt to make something out of nothing. After 4 decades with material acquisition responsibility I have found the difference between Procurement and Purchasing is solely the word preference of the management team. What is the difference between a purchasing agent and a procurement agent? I say nada, zip, none, zero.”

***

“Purchasing always suggests to me buying of commodities and therefore implies a simplified process, whereas in procurement one may be negotiating not necessarily for common goods at the lowest price but perhaps for a custom-made prototype, for example, or services where assurance of quality may weigh more than cost in determining award.”

***

At Vroozi, we don’t really have a strong opinion on this debate – mostly because our eProcurement solution is geared towards both groups (that is, if you consider them separate to begin with).

Where do you stand on this debate? Is there a difference between purchasing and procurement? Be sure to let us know in the comments section.

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