Procurement is the process of obtaining the goods and services a business needs. It includes defining the requirement, choosing suppliers, agreeing terms, purchasing, checking delivery and reviewing the result. Purchasing is the transaction-focused part of that wider process.
For a small retailer, kitchen or stockroom, procurement may be handled by the owner or operations lead. The practical aim is to get suitable supplies when needed, at an acceptable total cost, with enough evidence to resolve changes and approve the bill.
Procurement vs purchasing
| Procurement decision | Purchasing activity that follows |
|---|---|
| Which supplier meets our specification and required date? | Issue the reviewed purchase order |
| Does a lower unit price justify a larger order? | Order the agreed pack quantities |
| Which substitutes are acceptable? | Review the supplier's proposed change |
| Is the supplier meeting expectations? | Record receipts and unresolved balances for review |
The distinction helps assign work; it is not a claim that purchasing teams never negotiate or evaluate suppliers. Role names and boundaries vary by business.
Direct procurement covers inputs used in goods or services the business sells, such as retail merchandise or ingredients. Indirect procurement covers operating needs, such as cleaning supplies or office equipment. Services also require procurement, although their acceptance evidence differs from a count of delivered goods.