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. The fundamental or most basic steps of purchasing goods or services should be employed frequently as a best practice in all businesses. Procurement is a broader concept, and it includes purchasing as its part. Procurement is comprehensive, generally including everything from selecting a supplier or vendors to negotiating those contracts. All services or goods the firm or company uses 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 Purchases vs Procurement are popular choices in the market. let us discuss some of the major differences:
- The key difference between the two is: Procurement, as stated earlier, is a broader term that includes designing, processing, sourcing, negotiating, and fixing standards, whereas purchase is a simple and concise term that shall incorporate providing 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 that purchase is considered more casual and informal. Conversely, procurement will be considered a more formal business term.
- A purchase is a type of process that we partake in every day. We would purchase the stuff we want, whether 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. Handling PO processing is critical, ensuring that every purchase is formally documented, approved, and tracked throughout the procurement process.
- Purchase or buying is an action. Hence it is a verb, whereas procurement is a noun.
Purchase vs Procurement Comparison Table
Below is the 5 topmost comparison between Purchase vs Procurement
| The Basis of Comparison |
Purchase |
Procurement |
| Basic Definition | Purchasing is a simple and concise term that incorporates providing money for a product or goods. It can even be said that purchasing is 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, and raw materials. It will follow through to ensure contracts will be fulfilled according to the contract terms. The goal or objectives of procurement are spending control, cost savings, and workflow efficiency. |
| Context | As stated earlier, a simple and concise term will incorporate giving money for a product or goods. | A broader term will include designing, processing, sourcing, negotiating, and fixing the standards. |
| What it incorporates | Purchasing terms generally will Incorporate purchasing or buying of goods or an object, i.e. paying 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 purchasing as part of its process, as explained above. |
| Few Examples |
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Conclusion
Because the purchase is a process within the overarching procurement process, the term vs procurement is commonly used interchangeably. In the business world, the practice of using the same terminology in either printed materials or in conversation is a routine task. However, it is often perplexing, and it must be avoided. Procurement will deal with the negotiation, the sourcing activities, 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 goods will be ordered. However, purchasing defines the transactional function or activity of procurement for services or 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 spending, and the most optimal delivery options.
Where a purchase will begin and will end with the acquisition of services and goods, procurement is an ongoing and continuing detailed design function or the process that makes informed purchase decisions based upon the available data, and that should be kept up to date. The purchasing department will continually seek and monitor to improve and optimize the supplier relationships, forge connections, and try to find out how to lower supply chain management costs and minimize the entity’s losses.
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