What’s The Difference Between Procurement And Purchasing?

Both procurement and purchasing are involved in the process of acquiring goods and services. The two terms are often used interchangeably to describe this; however, they are two distinctly different processes. Procurement deals with the whole strategic life cycle of acquisition whilst purchasing is the transactional (tactical) process of doing the actual acquiring.

What is Procurement?

Procurement is the whole strategic life cycle from identifying what goods and services are required by a business, running a sourcing activity to select the best value suppliers and then negotiating and managing contracts to managing the suppliers and measuring the outcomes of the process.

The process is done for each different category of goods and services and the life cycle is repeated towards the end of the term of each contract.

The purpose of procurement is to deliver value for money beyond just direct cost savings and sufficient quality and it does this by giving consistency, transparency and control over each of the different parts of the process.

Time efficiencies are realised by following proven processes and removing inefficient processes meaning time can be spent on more profitable activities. Additional money can be saved by identifying ways reduce to unnecessary waste and usage and by delivering efficiencies.

Increasingly importantly the procurement process adds value across the whole business by taking into account other considerations, such as ESG and supplier innovation, that are part of the overall ethos of the company and help to futureproof it and its supply chain.

What is Purchasing?

Purchasing is the transactional process part of procurement, from creating a purchase order and having it authorised to the placing of the order, the good and service being delivered and the payment being instructed.

The process is repeated many times a day across different goods and services and usually multiple goods and services are included under one category that is addressed by a single procurement process.

The man purpose of purchasing is to deliver cost savings and sufficient quality for the day-to-day business to operate.

Both procurement and purchasing are key parts of every business and having control over the processes results in them protecting their revenues.

Many companies, especially larger ones, who have more resources, have procurement and purchasing functions and processes in place to leverage the benefits of both. Nowadays they are relying less on spreadsheets and shared drives to do this by using digital solutions that maximises the benefits and deliver a great return on investment.

To help with purchasing there are several Purchase to Pay systems designed for SMEs, however there is only one procurement platform that has been designed specifically for SMEs and that is oboloo. oboloo is an intuitive and simple self-service cloud procurement system that enables SMEs to be supplier smart and have control over evert part of the procurement process from sourcing and contract management to supplier and savings management. To learn more about oboloo and have a free 30-day trial please visit www.oboloo.com.