Procurement vs. Purchasing… what’s the difference?

April 11, 2021

Many use the terms Procurement and Purchasing interchangeably. However, they are two different things.

TL;DR: Procurement refers to all the STRATEGIC activities that involve sourcing, negotiation, selection and compliance of vendors that  provide all the resources needed by an organization. Purchasing, on the other hand, is the TACTICAL process of how goods and services get ordered.

What is Procurement?

Procurement is the strategic process of sourcing and obtaining the products and services needed by an organization to achieve its business goals.

The processes below are all part of a comprehensive Procurement function:

  • Market Surveying
  • Creating an approved vendor list
  • Negotiating pricing and terms 
  • On-boarding and qualifying vendors
  • Supplier Management
  • Procure-to-pay process management (more on this later)
  • Record keeping and ever-green documentation

What is Purchasing?

Purchasing is a series of tactical activities involved in the specific sub-process of “procure-to-pay”, which is part of the overarching Procurement function. Listed below the steps in the purchasing process:

  • Requesting: Creating Purchasing Requests (aka Purchasing Requisition Forms)
  • Approvals: Reviewing and approving purchasing requests (including Quotes’ review)
  • Order Placement: Creating POs (purchase orders) and sending them to vendors
  • Receiving: Checking the quality and quantity of what was bought
  • Cross collaboration with Accounts Payable for post-purchasing tasks: Invoice processing, 3-way match, Payments and proper record keeping in the Accounting system.

If possible, you should focus your attention on the strategic value-adding processes involved in Procurement, and automate all of the tactical tasks involved in Purchasing. ControlHub helps organizations streamline all the tactical processes and tasks involved in your Procure-to-Pay process.

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