‘Purchasing’ and ‘Procurement’ are two terms that are often used without much distinction when an organization purchases goods or services.  The truth is that each term has its own significance and related processes. Procurement differs from purchasing, and you can get in-depth insights into their purposes from good procurement management courses online.

Procurement

Procurement is a broad term that encompasses different processes for sourcing an organization’s goods and services.

These include the following:

• Shortlisting of requirements of different business units
• Mapping resourceful vendors and assessing their delivery capabilities
• Floating ‘Request for Quotation’ on vendors based on requirements and work scope outlined in ‘Purchase Requisition’ raised by any unit
• Evaluation of competitive bids submitted by vendors based on price, quality, service, etc.
• Negotiation with the lowest bidder on terms of delivery and supply deadlines
• Rewarding of Purchase/ Work/ Delivery Order or contract to chosen vendor with relevant information like delivery quantity, rates, payment terms, etc.
• Submission of Invoice by the vendor after completion of stipulated work and certification by the organization’s internal audit/ quality monitoring team
• Release of payment to the vendor

The best management courses from an accredited body like Cudoo can offer you more functional insights into procurement.

Purchasing

Purchasing defines the steps followed by an organization for transacting with suppliers to buy goods or services. It is a constituent element of procurement.

Purchasing involves the following:

• Raising of Purchasing Requisition (PR) by a unit detailing the deliverables and expectations from a prospective vendor
• Approval of PR by different authorities mapped in organizational workflow hierarchy
• Releasing of Purchase Order carrying all relevant information to the suitable vendor
• Following up with vendor by the concerned department for supply of goods/ services
• Certification of successful delivery by vendor by the receiver after conducting due diligence on delivery terms
• Release of payment to the vendor as per order terms

You can learn more about the complexities involved by pursuing a good course in purchasing certification online.

Important Differences Between Procurement and Purchasing

The prime differentiating points between procurement and purchasing have been outlined below.

• Procurement signifies the complete gamut of activities needed to fulfill organizational requirements strategically, whereas ‘Purchasing’ involves transacting with vendors for goods/ services buying
• Procurement is aimed at adding value to the purchasing process through vendor evaluation and shortlisting, optimizing value, ensuring quality and cost efficiency, mitigating risks, enforcing compliance with contract terms, maintaining healthy vendor relationships, and other end-to-end activities
• Procurement is a lengthy and time-consuming process compared to purchasing
• Procurement looks after ‘Supplier Relationship Management to nurture long-term strategic vendor partners
• Procurement can sometimes entail more overhead costs than purchasing, particularly when the quantity of required goods is lesser

Conclusion

To understand the processes better, you can sign up for online courses on trusted websites. Cudoo offers online management courses with certificates for aspirants who want to excel in procurement and purchasing management from an organizational perspective.

Enrol now and take your career to newer heights of success.