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Another pair of terms that are often (inaccurately) used to mean the same thing are purchasing and procurement.
In the same way that logistics relates to supply chain management, purchasing is a process that occurs within the overarching process of procurement. To better illustrate this, let’s first explain what procurement is all about.
Procurement refers to all of the tasks involved in obtaining the optimal product from the optimal vendor, on optimal terms.
That said, procurement involves processes that occur before a purchase is made, as it is made, and after the actual transaction has been completed.
Finally, procurement on the other side of the purchase will have your company engaging with your suppliers repeatedly and more intensively over time, both for purchasing and other reasons.
For example, you might inquire as to whether a supplier offers related products or services that might allow you to get even more value out of the original purchase.
Similarly to supply chain management, procurement focuses on the context behind the business you do with your vendors, allowing you to move forward in the most mutually-beneficial way possible.
Now that we understand what procurement entails, the best way to explain purchasing is to zoom in on the “during purchase” stage of the process.
Whereas the initial stage of procurement is done internally, all subsequent processes involve engaging with your supplier of choice.
Specifically, the purchasing stage is where you:
While purchasing focuses more on the mechanical aspects of the supplier/buyer relationship, it’s worth noting that without these processes in place (and working optimally), this relationship will suffer.
If a buyer can’t hold up their end of the agreement in any way, their vendor is likely to sever ties without a second thought.
Proving to be a reliable and sustainable customer will lead vendors to see your business as highly valuable to their success. In turn, they’ll be more likely to work hard to keep your business — and may also be a bit more lenient should you need some leeway every once in a while.
Retail giants such as Apple, IKEA, Walmart, and Redmart started off no different from you and your business. Learn how these big players handle their inventory and supply chain.