Understanding Difference Between Purchasing and Procurement

Purchase(Sourcing) and procurement are two related, but different business terms that are often used interchangeably. Both are approaches for purchasing raw materials, services, components, and the supplies needed by a company to run its operations or manufacturing.  AGT&T procurement gives an insight into these two terms to help you understand the approach that you are taking for your manufacturing management.

Procurement

Simply put, procurement is the overarching system involving vendor selection, strategic vetting, contract pricing and terms negotiation, and purchasing of services and products for business purposes.

Lack of a proper procurement strategy can negatively affect a company’s ability to stay competitive in their market due to increased costs and limited quality control.

Purchase

Purchasing is a stage that comes before shipment; it is a subsection of the procurement process. As the name states, it is the process of identifying the source from where the goods and services will be procured. Parts and components sourcing services, such as those provided by AGT&T, involve selecting the right factory to match the manufacturing process, while upholding all product specifications and quality requirements which can be certified. It also provides cost savings through expert negotiations and leveraging AGT&T’s buying power

Basic Differences between Procurement and Purchase

While both involve materials or raw materials needed in the operation of the business, procurement is more focused on identifying and locating the sources for the parts your company needs. It is a subsection of the procurement process.
Purchase comes before procurement, although smaller enterprises may combine the two.
Procurement is the strategic process of obtaining the goods and services for your company needs to achieve its goals.
Procurement managers set and uphold quality standards, negotiate price & terms, select vendors, negotiate service levels and contracts, logistics planning and coordinate with their inventory control team.

Even though procurement and purchasing are closely related, they have certain distinctions that make each one unique. Manufacturers looking for global components, precise machined parts sourcing greatly rely on both purchase and procurement to acquire the parts needed for their final products. Associated Global Trade and Technology (AGT&T’s) is a leading procurement company that deals with global precision parts manufacturers & fabricators, specialized engineering parts or CNC machined components, that can be procured or developed with our experitise. If you are need Indian engineering products sourcing or any engineering products, components or CNC machined products to be developed get in touch with us today for your large scale global engineering parts and  components requirements.