Procurement vs Purchasing – What is The Difference?

The terms ‘purchasing’ and ‘procurement’ are often used interchangeably and imprecisely in many organisations, and in much of the academic literature - However, CIPS distinguishes between purchasing and procurement as follows:

Purchasing is:

1) Reactive:

Concerned with obtaining inputs in response to requests or instructions from user departments.

2) Transactional:

Processing purchase orders and contracts, in order to secure the best deal on a one-off or case-by-case basis.

3) Tactical:

Focuses on short-term buying processes and goals.

Procurement is:

1) Proactive:

Taking the initiative in developing purchasing policies and working with users to define requirements.

2) Relational:

Recognises that long-term best value is often obtained by developing long-term, collaborative relationships with selected suppliers – working with suppliers in a way that supports ongoing, mutually-beneficial business.

3) Strategic:

Focuses on contributing to the achievement of long-term, high-level organisational objectives such as; profitability, competitive advantage, innovation and corporate social responsibility (CSR).