What is the Difference Between Supply Chain and Procurement?
The terms “supply chain” and “procurement” are often used interchangeably, but they actually refer to two different aspects of the manufacturing process. Procurement is the process of acquiring goods and services, while supply chain is the process of managing the flow of goods and materials. In this blog post, we will explore the differences between supply chain and procurement, and how they both play a crucial role in manufacturing. We will also discuss the benefits and challenges of each.
What is supply chain?
The supply chain is the system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer.
What is procurement?
Procurement is the process of acquiring goods or services from an external source. It is the act of finding, negotiating, and buying goods or services from suppliers. It includes the contracting and purchase of materials, supplies, and services.
The difference between supply chain and procurement
In business, the term “supply chain” refers to the process of making and distributing a product or service. The supply chain includes all of the steps from acquiring raw materials to delivering the final product to the customer. Procurement is a part of the supply chain that deals with obtaining goods and services from suppliers.
Procurement is the process of finding and selecting suppliers and negotiating contracts. It also includes placing orders with suppliers and managing supplier relationships. The goal of procurement is to obtain supplies at the best possible price while maintaining quality standards.
The main difference between supply chain and procurement is that procurement is just one part of the supply chain. The procurement process focuses on obtaining goods and services, while the supply chain encompasses all aspects of making and delivering a product or service.
In short, the main difference between procurement and supply chain is that procurement is focused on acquiring goods or services, while supply chain is focused on managing the flow of goods and services.
Why is it important to understand the difference?
It is important to understand the difference between supply chain and procurement because they are two different concepts with different objectives.
Supply chain refers to the entire process of how a product or service is delivered from point of origin to point of consumption. It includes the planning, coordination and management of all activities involved in the sourcing, manufacture, transport, storage and delivery of the final product or service.
Procurement, on the other hand, is the process of acquiring goods or services from an external source. It involves identification of need, selection of supplier, negotiation of price and terms, purchase order placement and receipt of goods or services.
While both supply chain and procurement are important components in the delivery of goods or services, they serve different purposes. Supply chain is focused on ensuring an efficient and effective flow of materials, while procurement is focused on obtaining goods or services at the best possible price.
Conclusion
In conclusion, supply chain and procurement are two essential but distinct functions within a company. Supply chain is responsible for managing the flow of goods and materials, while procurement is responsible for sourcing and purchasing the necessary supplies. Both supply chain and procurement play a vital role in ensuring that a company runs smoothly and efficiently.