Monday, 10 March 2014

The Distinction between Procurement and Purchasing

There are two different actions that take place in goods and services; these are known as procurement and purchasing. Each one has different methods and approaches, so what are the main differences?

Procurement – Procurement is when goods or services are acquired at the best cost while meeting the needs of the purchaser. During the act of procurement, the purchaser takes a look at the quantity, quality, location and times. Procurement is usually done mainly by companies and organizations. The two types of procurement are called direct and indirect procurements. Direct procurement usually consists of raw materials and production good; while indirect procurement includes maintenance, operating supplies and repair.

There are seven stops in the business process of procurement:
  • Gathering information
  • Supplier contact
  • Background reviews
  • Consumption
  • Negotiation
  • Fulfillment
  • Maintenance
  • Renewal or disposal
Purchasing – Purchasing is a form of buying goods or services at a specific price depending on the quality and quantity. It’s usually done by both individuals and organization/companies. There are two divisions in purchasing too, direct and indirect purchasing. Direct purchasing involves paying money directly and having the goods delivered to the business or home; whereas, indirect purchasing is completed through a third party. 

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