While “purchasing” is a strategic function, procurement is the opposite, a completely operational task . Purchasing means, among other things, looking for products that satisfy a need, comparing between several, negotiating prices and conditions with suppliers, approving, controlling quality, testing to verify that the supplier’s promises are fulfilled, budgeting, controlling,… In short, a series of tasks of vital importance so that supplies and raw materials are in line with the needs of the company. So, what is the difference between the functions of “Purchasing” and “Procurement”?
The procurement function is the pure and simple execution of purchases , previously agreed upon, at the times when raw materials or supplies are needed. Few other tasks can be included within this function, control upon arrival at the client's facilities, registration in the corresponding systems,... there is not much more to scratch. Ordering "x" units of a product is not buying, it is supplying. Checking that they have been delivered, the same. The difference is as important as when you realize that the price that a supplier charges you is much higher than the one applied to the company next door. The neighbor has made a purchase management and we have not.
Many companies today have shiny signs that say “Purchasing Department .” However, nothing is purchased there, only supplies are made. Someone performs the procurement consulting email list function and the purchasing function is distributed under the responsibility of someone else in another department. I remember a case of a company where I worked where the “Purchasing Manager” only supplied, but he thought he was the king of the mambo. He did not negotiate prices, even though he said he did. What happened was that he asked for 3 quotes from different suppliers and he settled on the lowest one. Did none of them have the means to adjust the price, deadlines or level of service?
In another case, in another company, the purchasing manager (he was one of those who actually bought) retired and his role was shared among those who remained in the department. The overall vision of purchasing was lost and, what's more, the people who stayed did not have the same management capacity as him, performing a procurement function and nothing more. In the long run, costs skyrocketed, as did complaints about poor product quality. Suppliers were like Peter in their own house and passed agreements and contracts wherever they wanted.
However, where there is usually not much difference between purchases and supplies is at the end of the year, Christmas or when it is time to renew contracts. The baskets and gifts never stop arriving. Yes, they arrive, whether you see them or not. Many suppliers usually send them, whether you buy or supply, since you have to keep both functions “happy”.
