What is Procurement compare to Purchasing?

The word Procurement and Purchasing has been used interchangeably by many, including those who are engaged in the profession.

What is the real difference between Purchasing and Procurement?

I will explain in this blog the differences and also the objectives of the two job description. First of all, Purchasing is the origin term use to meant "material man". It was coined by Charles Babbage in 1832 to describe the responsibility of someone in the industry who will select, purchase and arrange delivery of article required for the construction of railway track.

These term were use since then to described the arrangement of the selection, buying and delivery of material to the business need. These were described as an administrative function.

During the expansion of the industrial revolution in the early 20th century, there begin a need to run purchasing into a managerial function. The scope of the task begin to expand and it take up a strategic role in businesses.

Thus, we need to break up the responsibility of each of the respective role as following:-

Purchasing - is the tactical role in business organization where it function as the executioner of the task of sourcing, selecting, issue purchase order and resolve immediate operational issue to ensure the material are supply on schedule to the business.

Example of tactical role in purchasing will be to resolve supply problem which impact production or business needs and organize the sourcing of new supply.

These are tactical role to ensure the business operate smoothly. The objective of the purchasing function is such that, the ultimate aim is to meet the procurement goal which are strategic to the business.

Procurement -  is the managing of the full spectrum of material supply to the business and it function by setting long term strategies to support business goal.

Example of strategic objective of procurement is to plan strategies in order to meet business goal and these objective ranging from developing supplier management strategies, planning long term cost reduction in order to stay efficient, set up strategic objective to achieve in sourcing, planning, inventory management and other task relevant to ensure business goal are achieve,

In summary, we can conclude, purchasing ultimate agenda is to meet the objective set by the procurement management while procurement set the objective to achieve business goal.

It is a Tactical strategy (short term and immediate needs) versus Strategic strategy (long term plan)