Many people talk about procurement and supply chain management as if they are identical processes, but there are important differences between the two. Supply chain management is the handling of the entire production flow of goods or services — from ordering the raw components to the final product delivery; whereas procurement is just one aspect of supply chain management.
In this article, we’ll consider the details of both procurement and supply chain management, what each process consists of, and how to distinguish between the two.
What is procurement?
Procurement is the process by which organizations source goods and services to achieve their objectives and meet their business needs. It’s one step in the supply chain management process. Procurement involves everything it takes for a company to acquire the goods and services it needs, including planning, quality control, pricing, supplier selection, and waste management.
There are two types of procurement:
Elements of the procurement process
The procurement process involves a lot of tracking and updating, which is why many companies have a procurement manager.
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What does a procurement manager do?
Now, how does procurement fit into overall supply chain management? Let’s take a look at what the supply chain is and how it’s different from procurement.
A supply chain is the complete network of a company, including its suppliers and vendors, and the lifecycle of processes; from the raw materials, to product development, to delivering the final product to the customer.
An organization's supply chain may include:
What is supply chain management (SCM)?
The output of a step is simply what results from carrying out the transformation.
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Procurement involves everything it takes for a company to acquire the goods and services it needs, including planning, quality control, pricing, supplier selection, and waste management.