What is Procurement v Purchasing
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- Опубліковано 25 чер 2024
- Are you confused about the difference between procurement v purchasing? Trent explains.
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👇 TIMESTAMPS (in case you want to skip) 👇
0:00 Intro
0:40 Trent’s career in Procurement & Purchasing
1:16 Difference between Purchasing & Procurement
3:41 Category Management
5:09 Where should Procurement report to w/in the business structure?
5:58 Is Procurement a good career?
7:09 Outro
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This is maybe the best introduction to procurement / purchasing i have stumbled upon here in UA-cam
Thanks. Feedback is always appreciated...
I totaly agree this comment
being a recent graduate with a BSc in procurement and contract management, I really resonate well with those definitions; epic.
Thanks for the feedback.
@Yves me? Cranfield in the UK.
@@supplychainsecrets evening Thankyou for this video. What are the most excel formulas used in purchasing.
@@supplychainsecrets Hi there, great video. I am new to procurement and purchasing. And im Interested in pursuing this career. Where can you recommend I start. Thanks
@@RWarrior777 Seems I saw u with other comment !!!
procurement is strategic, purchasing is tactical.. :)
I guess it is...
It is impressive to wrap up and explain massive information in an 8 mins video.
Great to hear!
Perfect explanation! Awesome to see Trent on the channel
Thank you! Great explanation! Now I know what the difference is between procurement and purchasing!!
Glad it was helpful!
Another fantastic video! Trent sounds like he has some serious expertise in this field! Thanks guys!
Sure has!
The best way to approach such situations is to go back to etymology. Not every item procured must have been purchased.
The ultimate goal of purchasing is to procure an item either temporarily or permanently, thus purchasing may be considered one of the most common methods to procure, thus the procurement process was named after purchasing for a long time.
Great insight!
Great core principals with great examples to be able explain this to our customers. Thank you very much for this!
Our pleasure!
07:05 negotiation is also part of Procurement. Purchasing shoul be about PO.
That's a good way to put it
This is very helpful, best video ever. Thank you
Glad to be of help.
that was great information from the guest speaker on procurement versus purchasing
Trent is not really a Guest. He's part of my consulting business. We just posted another video with Trent.
very helpful and well described, thousand times better than my professor.
thank you so much.
You're very welcome!
I like how simple you have explained the two concepts
People like to make hings complicated!
@@supplychainsecrets You have simplified it ....good work
It is not a concept. Purchasing is a verb and Procurement is a noun
Thank you for this video. Precise one.
Glad you liked it!
Really was of the opinion that both Procurement and Purchasing are same but used interchangeably... Thanks a lot for this useful video explaining the difference...
A lot of people get them confused.
GOSH! What is the answer - GET to it!
LOL> And some complain the videos are too short and rushed .......... I'm like you though. 🙂
@CoCo Initially I have difficulty also to understand despite great explanations & elaborations given by Trent. But Rob aka @Supply Chain Secrets summarise it brilliantly i.e
*Procurement = the process of acquiring goods or services
*Purchasing = buying/paying for the goods or services
wonderful. Thanks for sharing this excellent knowledge.
Thanks Ismail. Glad you enjoyed it.
Enjoyed the video! I had to subscribe and looking forward to go and see your other videos. Thank you.
Awesome! Thank you!
Perfect! Got some more visibility now. Thanks for sharing this video.
You're welcome!
@@supplychainsecrets mkmny.
. B ç
Thank You
Thanks!!!!! Perfect explanation!!
Glad it helped!
Really clear and undestandable video!
Glad you think so!
Following live from zambia procurement officer at MINISTRY OF HEALTH
Thank You for joining us.......
Thanks for the great video Rob, please more video regarding Procurement!!
No problem. Trent, we need more!
@@supplychainsecrets maybe some focused on the different elements we discussed... category, sourcing and SRM?
@@trentmorris8442 . Let's book in some studio time!
I like your videos sooo much! Thanks for your work!)
Many thanks. We thrive on feedback :-)
Crystal clear definitions
Glad it helped.
thank you for this video..I was confused by these two terms
Glad it was helpful!
Thanks it's crystal clear explanation
Glad you think so!
Thanks for making and sharing a great content. This is excellent!
Glad you enjoy it!
Thanks Trent
Amazing analogy, thanks for sharing with us :)
Glad it made sense...
Thankyou for the clear explanation!
Glad it was helpful!
thanks a lot
thank you for the fantastic video.
glad you liked it.
Excellent video.
Thanks for sharing.
Thanks for watching!
simple and clear video
Glad you liked it
it is very lucid explanation. Thanks
Glad you think so!
I’m procurement & import supervisor and I really haven’t heard well about these definitions in an easily way before 😁
Hope it helps
@@supplychainsecrets it really helped me my friend. If you have linked in, please inform me. Thanks
@@viniciusteles2368 www.linkedin.com/in/robobyrne/
its a well discussed topic.
Thank you.
Well articulated
Thanks.
Thanks! Great explanation :)
Glad you enjoyed it!
This video is really helpful.👍
Glad it was helpful!
Thank really helpful 👍
Our pleasure
Simple: Procurement is Ocean, Sourcing is Island, Purchasing is "Island Soil", and Bringing that "Soil" at your premises is Logistics !!!
Interesting perspective 🙂
I love your video and I would like to hear more about purchasing
Sure, we'll do some more on purchasing.
Hii, I have started my master's In procurement and Supply chain management.
This vedios should help me to gain my further knowledge in scm❤️💯
Glad they are helpful. Good luck in your studies. I often do lectures for Universities. Where are you studying?
@@supplychainsecrets I'm Studying in Robert Gordon University, Aberdeen
SCM certification which has recognition through out the world.
Agreed!
Sorry guys have to give some critical feedback: a) Purchasing must be done by a separate team due to 4 eyes - dual control concept b) Purchasing generally does NOT include negotiating the price as mentioned at the end of this video - this is Procurement's responsibility
I think to a degree it can depend on the size of the business and hence the size of the procurement and purchasing teams. It's probably also worth saying, as many people take these things very literally, that there are no 'rules' that must be followed.
@@supplychainsecrets Thanks for your reply. I rewatched the video and agree with nearly all of it. I agree that the size of the company can impact the blending / non blending of the purchasing and procurement functions, but I understood your video sets out primarily with the goal to differentiate these functions. Your guest's cited experiences are with large companies, so this was my context for my comment - that purchasing and procurement should be ideally in different functions and not be the same person doing procurement and purchasing for sake of conflict of interest. Moreover I find that 'purchasing' teams generally are a subset of operations especially when it comes to direct materials - not procurement. Indirect materials nearly anyone in the company can be doing the 'purchasing' so it is important to point out that Procurement is really a function on its own - which really makes the biggest difference between the two. Purchasing is more an process within a function as opposed to being on its own. Procurement is a function. Still...I agree with majority of the content presented here. Also I might agree with your comment about 'rules' with two caveats - my impression is you are presenting best practices - not rules, so this was my interpretation and lets not forget most companies actually do have a procurement policy in place which do indeed represent rules and the ideal of conflict of interest is one of those matters which procurement have to tackle in the company procurement policy. I appreciate what you are doing and thank you for the dialog. I hope you invite discussion to your videos.
Larson and Halldorsson identified four perspectives on the relationship between Procurement and Supply Chain Management. Can you please Mention and briefly explain these four perspectives.
I'm not familiar with their work, sorry. This sounds like an study assignment question 🙂
Really helpful!
Glad you think so!
Well said!
Thanks. Glad it made sense.
Nice informative video ....
Glad you liked it
Thanks for information.
Know I know what procurement & pucharsing dept. 😊🤝
Most welcome 😊
A very sharp useful video!!!
Glad you liked it
@@supplychainsecrets I loved it mister.
Being a procurement professional..I'm really very
Happy for my role and responsibilities what I'm doing day to day activities especially meeting with personality for business process...I'm never tried off my job...it's really interesting compare to other professionals.this is my personal opinion might be I'm wrong....pls don't judge me
That's great to hear!
Do you mind explaining how you got into procurement? What education did you need and how you did it etc.
Wts ur education?
Usually I get something on this🤘
Great topic
Thanks. Glad you liked it.
good explanation!
Glad it helped!
Could you please elaborate on Global sourcing category manage ? Specially for oil and gas industry. If possible could you please share some presentation or article
Hi Vaibhav, A Global sourcing category manager will typically be a person who either has global coverage or global authority. In a lot of companies sourcing and category are two separate functions; category being responsible for developing the strategy of how materials and services are going to fulfil the requirements of the company, and then managing stakeholders during the sourcing process. The sourcing team is usually quite outwardly focused and is specifically looking at fulfilling the requirements presented by the category team for the most competitive price.Whilst it is not uncommon for the one person to cover both functions, it does make it difficult to remain unattached during the sourcing process.
A good example in the oil and gas space might be for the provision of offshore support services, whether that be aero or maritime. The category manager would be responsible for defining what the company needs, ensuring that the following teams have input: operations, health, safety and wellbeing, quality, regulatory, public relations, legal, finance, tax, etc. Once the strategy was defined they would then get the sourcing function to take the final plan to market and only talk to suppliers who met all of the basic requirements. That way all vendors bidding for the work are competing on a level playing field.
Thanks
Our Pleasure
Super like, can you please upload a video with detail description on supplier relationship management
Yes, sure
Great explanation !!
Procurement is the process of getting materials you need.
Sourcing is finding and vetting the suppliers of those materials.
Purchasing focuses on how products and services are acquired and ordered.
Thanks. Glad you liked it.
thanks
You're welcome!
What are the differences between Government Procurement and Private Sector Procurement? Is it a different corporate culture and what are the expectations between the two?
I might ask Trent to share a view on this, but from my own perspective, Government Procurement can often be structured differently. This can be due to an increased need for governance and sometimes the very large spend involved. For that reason it will often report direct to the CEO, rather than in some commercial organisations, where it is deemed part of Supply Chain.
❤
Glad you liked it
BRAVO 👏🏼👏🏼👏🏼👏🏼
We'll have to get him back on the channel soon 🙂
Between procurement and account's who's the boss.
Two quite different departments usually. Depending on the business structure, they might both report to the CFO.
So what is technically correct?
1. I have purchased a new car.
2. I have procured a new car.
Purchased 🙂 That was the act of buying it. The 'Procurement' process was doing all the research on what was the best car to buy for your needs and checking the prices.
@@supplychainsecretsOkay, now I get it. Thanks for clarifying :)
I'm on the verge of starting my own trucking business.
Who do I contact within the supply chain in order to get a contract with a company.
A procurement manager?
Or logistics manager?
What do they typically look for in a carrier service?
Do you know what I say to people who want to start a trucking business? But a coffee shop instead 🙂 It's a very tough industry. Very competitive and low profit. Not sure how it is in your country? Where are you?
THe contact will vary from company to company. Depends on size, industry, structure. Could be procurement, logistics, transportation or in small companies the warehouse manager.
How about procurement vs sourcing category management?
I would have said that sourcing category management is part of procurement.....
Can you clarify Material Buyer role is same as Supply relation Managment who maintains long term relationship once the agreement is fixed by Procurement team.
HI Sudeesh, great question. It really depends on how your organisation decides to define the role. However typically a material buyer would be the person responsible for the actual purchase of raw materials, in accordance with supply contracts, destined for manufacture or construction. They may also be involved in operational planning in areas like sequencing or coordination. A Supplier Relationship manager is the person responsible for the overall performance of the contract. They ensure that all parties are adhering, and hopefully receiving benefit from, the relationship. They would normally work closely with the Account Manager on the Vendor's side. That being said in smaller organisations they could possibly be the same person.
There will be a team for purchase Dept
Managerial level work will be done by manager
Purchaser will do his role and responsibility his designation is small and will coordinate with purchase manager and purchase manager discuss with cost controller as this amount is in their budget or over budgeted and then these both people discussed with finance manager and chief procurement officer to proceed or to need discuss with CEO of the company and then they will decide to proceed or to stop CEO decision will be final decision as per cost of the purchase request and another part client approval also is a mandatory to proceed to purchase the permanent material as per client approval
Without higher authority approval purchase Dept or procurement Dept cannot do any work in purchase field
Lot of approvals needed to purchase one permanent material except consumables and small tools and remaining all material approvals must
Purchase roles and responsibilities are very big procedure
I have 15 years exp in purchase field but still day by day I learn new things in purchase field
Purchase and procurement team have to look logistic Dept also import and export of material and scaffolding etc from one country to another country
Purchase and procurement is very big sea it will not end of any procedure
One problem will go and another problem will come in this field
This work is joyful work with lot of complications
We have to fulfill every person's need of material at all sites
Many sites many different construction managers requirement it is difficult to handle one or two person on the dept
Purchase dept and procurement dept is very big sea it is unend up of work
I am very in pressed to be part of this training .
glad you find it useful.
I have Bachelors degree in Business Administration, how do I get into procurement and how do I climb the ladder in the supply chain management field
Always the same advice. Get a 'foot in the door', work hard, keep building your knowledge and education, take on opportunities, get noticed.....
The answer is on point
Thanks for your explanation however it was not up the mark. I want to add that procurement includes more engagements other than purchasing such as outsourcing, hiring, partnership and strategic alliances. Unlike purchasing which is task that only buys products or services. Moreover procurement includes Total acquisition Cost which focuses on after purchase costs, supplier reputation, CSR, so in but purchasing might select the supplier based on the Lowest price. There more difference as well.
We all have our different perspectives and interpretations. This is ours 😉
True. I really like your channel and I have a lot of tips in the Supply chain Field. Thanks for your support.
What are the procurement tools/tactics/ methods we can use?
That is a huge question! It would take a book to answer it
hello sir, is online selling an example of alternative procurement under shopping?
Not really. online shopping is the consumer buying things. Procurement is a business buying things, often to sell them to the consumer or convert them in some way before sale.
Can you add a topic about Tender and Tender processing
Good topic. Yes.
Please have a video that will give idea about how to become a procurement consultant.
Hi Sudipto, we might do some in one of our channels focusing on consulting.
In the meantime, feel free to explore the channel and you might find some topics that could help you.
Here's the link: www.youtube.com/@ConsultingBusinessSchool
So, would it be appropriate to say, procurement is researching the value to the user and Purchasing is acquiring the asset or service?
That's quite a good way to put it!
Welp! This summed it up for me Mike. Thank you 😊
Great interview
Glad you found it useful. We'll do some more with Trent.
@@supplychainsecrets that would be great. Interested in Sheri's input also. I am a woman with agricultural and construction backgrounds with a double business degree in international business and finance. Looking for info on breaking into procurement and American exports. Maybe physical commodities or building materials.
That means procurement is the preparation for proper purchase?
Yes, that's it!
Purchase is a part of procurement.
Sourcing+Contract Setting+Purchasing (goods / services) = Procurement
Sir a question, Do you have videos on PCI certifications and it being very expensive out of reach, what is the affordable way to learn and get certification and would that help my entry into Supply Chains and Logistics
Sorry I don't have any information on that.
@@supplychainsecretsThank you for the prompt message. Look forward when you can, no worries as I follow you.
What is purchasing manual and purchasing function. I get confused on these two.
I'm not sure I fully understand your question, but let me put it this way. The purchasing 'manual' might be used by the purchasing 'staff' carrying out the purchasing 'function'.
well, I love the interview, I am a Procurement Officer at my company but I don't have any certification in procurement, because I studied Information Technology. so can you link me up with an online course that will help me get my certification?
I am Stephen Browne from Sierra Leone-West Africa
I’m sorry, I’m not aware of any suitable courses.
You can contact the chartered institute of procurement and supply CIPS
Does Trent have his own consulting business? If so is there a link that can be posted
No, Trent is part of my team at Logistics Bureau :-) www.logisticsbureau.com/
@@supplychainsecrets Great thank you, i will take a look :-)
Does selling development lease tender procurement opportunity come under purchasing.
Not sure I really understand that. Could you explain a bit more?
@@supplychainsecrets hello, I’m working on a innovation & R&D project and to cover the capital cost For instead I would like to use the same principles and method real estate companies use when they sell long term term development lease to development companies in financing & handling the development of residential projects,
good video regarding information. Rather unnecessary interruptions from the gentleman on the left. I understand what he's doing, which would very well apply in a personal conversation, but in a youtube video all these confirmation-sounds and nods just distract from the relevant information. Thank you for your work.
I will try to behave better in interviews 🙂
Being mechanical engineer ,hws career growth in purchase engineer?worthy?
Sorry I don't know much about purchasing in engineering.
Truly informative video, I am having 12 years of work experience in procurement in India, and i want to move out of India for growth perspective, can you please guide me
Moving to another country for work is not an easy thing usually. It all depends in Visas.
Great video. I might be a different type of viewer here for you since I work for the bank as an Account Manager within the Corporate Card space. Many businesses deploy a card program for the members of their company and they use those cards for many things including T&E, Purchasing, Payables, Fleet etc. managing conversations with our clients can be quite difficult at times if I do not understand their internal structure such as who am I speaking with or if I want to recommend they consider transitioning payments by check with a supplier to card, who is responsible for AP and what other players are involved with this decision making process. Any recommendations on how else I can improve in this area and better understand how choosing card as the preferred method of payment correlates in the procurement process for a business?
Depending on the size of the business, you could tray approaching the CFO, Procurement Manager, Head of Indirect Procurement, Purchasing Manager.
Is Rob small or is Trent a giant?
Both!
I speak spanish, someone can help me, pleaseeee
Google translate might help :)
Which is better procurement or purchase
They are 2 different things. Did you watch the video?
Procurement fresher salary scale???
@@muzahidhasan6962 Very hard to say, depends on the business and country........
Thank you
He looks like fluffy Sean Bean
LOL
Enjoyed Trent but did not like the way Rob rushed and cut him off. Slow down Rob! Take a breath. We want to hear everything!
Sorry about that! I'll ask Trent back again soon and won't rush him 🙂
❤
Glad you liked it