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| The Difference between Procurement and Supply Chain Management |
So I have been developing my next opportunity and have come across many organisations and recruitment agencies that appear not to know the difference. Okay, let’s face it. We use a lot of the terms associated with the procurement world interchangeably. Procurement! Purchasing! Supply chain management! They’re all the same!
No…not quite.
These terms are related, of course, but they aren’t interchangeable. There is a distinct difference between procurement and supply chain management. Procurement “is the process of getting the goods and/or services your company needs to fulfill its business model. Some of the tasks involved in procurement include developing standards of quality, financing purchases, negotiating price, buying goods, inventory control and disposal of waste products like packaging.
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In the overall supply chain process, procurement stops once your company has possession of the goods. To make a profit, the cost of procuring your goods must be less than the amount you can sell the goods for, minus whatever costs are associated with processing and selling them.”
A supply chain “consists of everybody involved in getting your product in the hands of a customer. It includes raw material gatherers, manufacturers, transportation companies, wholesale warehouses, in-house staff, stock rooms and the teenager at the register. It also includes the tasks and functions that contribute to moving that product, such as quality control, marketing, procurement and sourcing.
Using the above analogy, the supply chain can be considered the entire chair, while procurement and sourcing are parts of the chair.” Procurement is the process of getting the goods you need, while supply chain is the infrastructure (extensive, in many cases) needed to get you those goods.
Supply Chain Management
So, if a supply chain is the network of manufacturers, suppliers and logistics providers needed to get a specific product to your business and, subsequently, your customers…then what is supply chain management? At its core, supply chain management is the act of overseeing and managing a supply chain to ensure it is operating as efficiently as possible. That means, amongst other things, ensuring all suppliers and manufacturers are maintaining the desired quality of production and that both camps are engaged in ethical business practices. The latter point is a significant issue faced by many organizations today.
If a piece (or pieces) of a supply chain aren’t doing business in an ethical manner (think child labour or environmental damage) then the organization receiving goods from that supply chain can suffer negative repercussions as a result. Supply chain management should ultimately be considered one of many responsibilities faced by a procurement function.
By highlighting these differences, we will get a better, more fulsome understanding of the intricate procurement world. And hopefully, we”ll stop using terms interchangeably when we shouldn’t. Thanks to Sean Kolenko for the main text, which can be found here: https://blog.procurify.com/2014/10/28/difference-procurement-supply-chain-management/
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The Author: Peter Duffy FCIPS (Chartered)
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🎯 Do you need advice on getting the most out of Procurement, ensuring delivery on Business Outcomes? See what I have achieved in my career to date…. ♻️ Delivery on how are you can positively contribute to the UN’s 17 Sustainability Goals?
🌈 Committed to working in a culturally diverse, innovative way leading by example. 🏅 Fully qualified Chartered FCIPS level 6 practitioner, ⚖️ ethically certified, 🌟 Gold level CPD with over 37 years Procurement & Supply Chain experience.
➡️ Experience delivering cost savings and strategy across multiple categories such as: Digital Transformation, AI & IA, Energy, Facilities (Hard & Soft) Management, Risk Mitigation, Data & Analytics, P2P as well as oversight leadership of teams through gateway reviews.
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🟢 Internationally I have worked in Zimbabwe 🇿🇼, United Kingdom🇬🇧, South Africa🇿🇦, and the United States🇺🇸. Both in the Private and Public Sectors. ✏️ Accredited Chartered Fellow of CIPS (Chartered Institute of Procurement & Supply), Ethically qualified, with significant annual CPD hours gained, elected CIPS North of England Congress Representative and past CIPS Manchester Branch Chair. 10 years volunteer experience with CIPS.
✅ As an accomplished, commercially astute, confident and inspiring Procurement Professional who displays leadership through respect, trust and empowerment of teams. Outstanding stakeholder/supplier relationship skills up to CEO/Board/Permanent Secretary and Minister.
Confident in speaking truth to power, giving clear, honest feedback. Experienced in delivery of contracts/projects to budget and time across a wide range of services, direct and indirect categories working in multiple countries globally, culturally aware and believes in diversity and inclusion. Focused on sustainable, ethical solutions that also deliver social value whilst adhering to professional standards.
Demonstrable history of success impacting the bottom line and brand reputation. Experienced in both private & public sectors. ❇️ Like what you see? I believe I can relieve the pain in Procurement – Message me though LinkedIn and let’s discuss how I can help….
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