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Written by: Eman Abouzeid, CSCP, CIPS
Terms such as buying, purchasing and procurement are often used interchangeably. However, CIPS distinguishes between “Purchasing & Procurement” as follows:
Purchasing: is defined as “the functions associated with buying the goods and services required by an organisation”. Purchasing is just one aspect of the wider procurement function, and includes activities such as ordering, expediting, receipt of goods into stock, and payment to suppliers.
Procurement: is defined as “the activities associated with acquiring products or services”. Procurement is a wider term than purchasing; it is usually taken to embrace activities prior to the establishment of a purchase contract. For example, it includes:
- Identification of a need.
- Sourcing (i.e. identifying and evaluating potential suppliers).
- Post-contract activities (contract management & management of supplier relationships).
On this analysis, the basic processes of purchasing and procurement are summarised as follows:
Purchasing process includes:
- Receiving purchase requisition (PR) from user department.
- Obtaining quotations from suppliers and evaluating them.
– Placing the official purchase order (PO).
– Receiving products/materials into stock.
- Effecting payment to suppliers.
Procurement process includes:
- Supply market monitoring.
– Identifying potential suppliers.
– Preparing approved supplier list.
– Identifying the right needs of internal user departments.
– Converting needs into clear specifications that can be understood by suppliers.
– Obtaining and evaluating quotations.
– Selecting the right suppliers.
– Efficient negotiations.
– Contract development.
– Contract management.
– Payment.
– Supplier relationship management.
Based on the above-mentioned:
Procurement is an umbrella/wider term covers purchasing.
Procurement is a broader process than purchasing, because it includes few activities prior to the actual purchasing (i.e. identification of right needs, preparing clear specifications, surveying the market) & few activities after the actual purchasing (i.e. supplier relationship management, contract management).
Purchasing is more “Reactive” to the internal needs. Meanwhile, procurement has a “Proactive” approach, because it works with user department in identifying the right needs. In addition, procurement contributes to the product design using its market knowledge.
Purchasing is more “Transactional” – focuses only on the purchasing transactions rather than supplier relationships.
Procurement is more “Relational” – focuses on establishing and maintaining fruitful and constructive long term relationships with qualified vendors/suppliers.
Purchasing has “Short-Term Goals”- achieving the 5 rights (right quality – right quantity – right price – right place – right time).
Procurement is more “Strategic or has Long-Term Goals” – contributes to achieving the competitive advantage of the organisation and its strategic goals.
In conclusion:
Procurement is a wider term than purchasing and has a broader process than purchasing.
Procurement is more proactive, relational and has a strategic approach than purchasing.
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七种武器---冲动 (2007-11-20) 葵花 
发表于 2018-4-20 16:31
