Generally, the terms supply chain management, purchase, and procurement are used interchangeably. The meaning and scope of these processes are quite different. Supply chain management is the largest process of the three. The procurement cycle is the first step in the supply chain, while a purchase is a step in the procurement process.
The terms procurement and purchase are often thought to mean the same. Although both these functions are related to sourcing and obtaining goods or services, there is a difference in their meaning and scope. The purchase procedure comprises functions like acquiring goods and services required by the organization. Activities within the purchase process are ordering, following up, receiving, and fulfilling payments for goods or services. The procurement process has a broader scope compared to the purchase process. Procurement activities include identifying, shortlisting, selecting, and acquiring goods and services, negotiating contracts, maintaining vendor relationships, contract management, compliance and risk management, and analysis of KPIs and margins.
Procurement and supply chain are different meaning terms that are used interchangeably. Procurement is the first step in the supply chain. Identifying the requirement, finalizing the vendor, purchasing the item, taking delivery of goods, and vendor payment are the key steps in the procurement process. The supply chain on the other hand covers the entire manufacturing cycle till the sale of goods and services. Stock procurement (raw material), manufacturing steps, transport of finished goods to wholesalers, warehouse management, retail distribution, and sale to the end-user, are the steps in the supply chain.