Do you know the real difference between purchasing and procurement? A lot of people mistakenly believe these words are interchangeable. Sure, they both start with the letter P, but that’s where the similarities end. Keep reading to learn the true meaning of these words when buying IT equipment, hardware, and software.
Purchasing Is a Transaction
When you need something right away, you simply purchase it at the store. IT purchases work in the same manner. The transaction begins when you receive a purchase requisition. Once approved, you create a PO and place an order with the vendor. They then deliver the product. After verifying receipt, you arrange payment to the supplier.
Purchasing focuses primarily on single transactions. There isn’t much emphasis on building long-term relationships with suppliers. Instead, purchasing is a reactive process to satisfy an immediate internal need. It’s about short-term goals. Buyers seek out the five “rights”: price, quality, quantity, place, and time.
Procurement Is a Process
Procurement leads to purchasing, but it’s not exactly the same thing. As we just discussed, a purchase is a buying transaction. On the other hand, procurement is an end-to-end process of acquiring goods or services. Yes, we know they still sound similar—so let’s break down the steps:
- Identify your need
- Find and screen potential suppliers
- Negotiate a fair price and terms
- Create a purchase order
- Accept delivery and perform quality checks
- Obtain invoice approval and pay the bill
Procurement takes a proactive approach to product acquisition. The process places a significant emphasis on creating long-term vendor relationships. It includes steps before, during, and after the actual purchase.
Is Purchasing or Procurement Better?
Since purchasing and procurement have different goals, they are both useful. Purchasing solves short-term needs. Procurement focuses on long-term solutions. Those looking for a quick buy and low price will opt for purchasing. But if you place value on vendor relationships, then procurement may be more your style.
And honestly, most companies end up using a combination of both.
Looking for an IT Procurement Partner?
Acquiring new technology isn’t always a walk in the park—especially if you’re not an IT expert. New software and hardware options enter the market all the time. It’s hard to keep track of them all. How can you ensure you select the products best suited for your company’s needs?
CMIT Solutions takes the guesswork out of product acquisition. We analyze your business objectives and recommend the best equipment choices. Long-standing relationships with many top brands and suppliers help us get unbeatable pricing for all our clients. Once you find what you need, we’ll order, track, and install everything. You don’t have to lift a finger! With 800 technicians and 240 locations, support is always available—no matter when you need it.
Interested in acquiring better technology for your business but don’t know where to begin? Get in touch with CMIT Solutions to further discuss the difference between purchasing and procurement.
