Speaker 1: Hi, welcome to Education Leaves. In this video, I am going to discuss the difference between procurement and purchasing. Let's start the video. Procurement and purchasing are the two terms that are often used interchangeably. If you ask a layman about the difference, you may get a reply that purchasing and procurement are one and the same, but, if you ask the same question to a manager, you'll get a significantly longer answer as to how, and why there's a world of differences between purchasing and procurement. Let's discuss what is procurement. Procurement refers to the process of identifying, shortlisting, selecting, and acquiring suitable goods or services from a third-party vendor through direct purchase, competitive bidding, or tendering process, while ensuring timely delivery of the right quality and quantity. What is purchasing? Purchasing is the set of functions associated with acquiring the goods and services that an organization requires. Purchasing is a small subset of the broader procurement function. This process includes activities like ordering, expediting, receiving, and fulfilling payment. Let's explains the differences between procurement and purchasing. The end goal of procurement is to identify the company's needs and fulfill the procurement of those need. It is a strategic and proactive process. On the other hand, the end goal of purchasing is to arrange company expenditure and buy goods and services for the company. It is a reactive process. In procurement, place is more importance on an item's value than how much it costs. But in purchasing, more focused on price than value. Procurement involved in the end-to-end activities that need it to acquire all necessary goods and services. Procurement does everything from need recognition to sourcing, contract closure, and record-keeping. Purchasing gets involved when it's time to buy goods and services. Tasks involved in purchasing are ordering, expediting, and payment. Procurement focused on developing long-term and a win-win relationship with suppliers. On the other hand, purchasing focused on making efficient transactions, not overly concerned with developing vendor relations.