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Home » Procurement and Purchasing are not the same: Here is how
POSTED ON September 21, 2021
In the context of acquiring goods for business operations, the terms procurement and purchasing are often used interchangeably. While the end result could be the same, i.e., the business acquires goods, but the process followed is entirely different. In fact, both the processes try to achieve different goals and objectives. For anyone who is into sourcing, it is essential to understand the difference between purchasing and procurement. Let’s check out their definitions first:
Purchasing is the act of buying the goods and services that a company needs to operate and/or manufacture products. It is a simple process that basically involves only two steps:
Broadly speaking, procurement is a function that describes the processes and activities involved in acquiring goods. It is distinct from purchasing as it goes beyond just acquiring the products and paying for them. It involves establishing requirements, market research, vendor evaluation and contract negotiation. It also includes all the activities involved in ordering and receiving the goods.
As you can see, purchasing and procurement both mean acquiring a product, but procurement is a much more elaborate process with a greater focus on deriving maximum value out of the transaction.
In the nutshell, procurement and purchasing are two entirely different processes even though the end result is the same. While procurement is strategic, purchasing is a short term, tactical process. Procurement involves a lot of research and strategic activities, but purchasing a straightforward step involving buying goods from existing suppliers. The goals are also different. The goal of purchasing is to acquire products at the best cost, but procurement focusses on increasing overall value. It also involves identifying, assessing and mitigating risk. So, one cannot use the terms purchasing and procurement interchangeably.
If you are looking to source products from China or you have a product idea that you think can be best manufactured in China, you need a local project manager to work on your behalf. A sourcing manager can help not just identify the right supplier for your need, but they can also coordinate all the activities and run the project on your behalf. They act like an extension of your team and have your best interests in mind.
Having spent years in the Chinese sourcing industry, and with a strong knowledge of best project management practices, we can help you derive maximum value from your China sourcing project. Get in touch with our team now to discuss your project.
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