THE DIFFERENCE BETWEEN PURCHASING AND PROCUREMENT

Let’s explore the difference between purchasing and procurement with Smart Link. Understanding the distinction between these two terms is crucial!

What is the difference between purchasing and procurement?

Procurement is understood as the overall process of acquiring goods, services, or works. It involves identifying, selecting, and acquiring these items from third-party suppliers through direct purchase, competitive bidding, or tendering. Procurement ensures timely delivery with the right quality and quantity.

Beyond purchasing, Procurement includes initial planning and defining the specifications of the products or services you want to acquire. It involves finding suitable suppliers, conducting value analysis, and negotiating the terms and conditions of contracts with suppliers.

Value analysis is the process of comparing suppliers to determine the benefits each supplier can bring to your organization and ranking them based on suitability.

The terms and conditions of supplier contracts must be determined to best serve your business while making the contract execution sustainable for the supplier. Once these activities are completed, purchasing is the final step in the procurement process.

Conclusion

As demonstrated above, both purchasing and procurement play essential roles in supply chain management. They ensure that businesses have the necessary and correct materials, goods, and services to operate efficiently. Both functions are crucial in building relationships with supply partners and ensuring that all transactions are seamless and transparent.

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