What is the difference between procurement and purchasing?

Difference Between Procurement and Purchasing

Many people use the terms purchasing and procurement interchangeably, but despite their apparent similarities they do have different meanings. This article is meant to clarify any confusion between these two related, yet different, business cousins.

Essentially, Procurement involves the process of selecting vendors, establishing payment terms, strategic vetting, selection and negotiation of contracts. Procurement is concerned with acquiring (procuring) all of the goods, services and work that is vital to an organization. Procurement is, basically, the overarching or umbrella term that includes purchasing.8

Purchasing, then, is a subset of procurement. Purchasing generally refers to buying things or services – this may include receiving and payment as well.

Because purchasing is a process within the overarching procurement process, both procurement and purchasing are often used interchangeably. In the business world, the practice of using similar terminology seems to work, although it can sometimes be a little confusing.

To recap: Procurement deals with the sourcing activities, negotiation, and strategic selection of goods and services that are usually of importance to an organization. Purchasing, however, is the process of how goods and services are ordered. Purchasing can usually be described as the transactional function of procurement for less vital goods or services.