The ultimate result of four activities is receipt of goods and services.
Purchasing and Supply with Nyasha Chizu
The words mean the same literary, professionally, they are different. They all are used to denote the function of, and the responsibility for acquiring materials, supplies and services.
The difference is in the necessary processes adopted prior to the action, the demarcation of the level of involvement of management in the decision making and strategic importance of each activity. Recently, the term supply management has become a phrase of choice to describe the professional acquisition process.
The reason why procurement profession is progressing at a slow pace is historical. The employees who serve in this function are merely known as buyers regardless of the level of responsibilities.
While procurement is one of the old professions as engineering, dating back to the biblical times, prior to 1900, few separate and distinct purchasing departments existed in commerce. On the literature side, on record, the first book specifically addressing institutionalised purchasing within this function was written by Marshall Kirkman in 1887.
Although early in the twentieth century several books on purchasing were published, the discussion of purchasing practices and concerns were tailored to specific industries and technical trade publications. To that extent, the uniformed forces only in the public sector systems for most countries have well established procurement units.
This led to most acquisition in the private and public sector relegated to buying. Buying is defined as acquiring by paying money, ensuring a reasonable purchase price is achieved to maintain operations.
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Buying in households is delegated to the children and maids, to acquire standard daily consumables such as bread, milk and eggs for breakfast after paying cash, and to clerical staff in institutions.
Some organisations now employ purchasing officers, the role of the purchasing officer and the buyer are somehow the same by definition. Purchasing is acquisition of supplies and services after payment. Technically and professionally, consideration and goods exchange hands at the same time from the two definitions.
The difference is that buying is operational while purchasing is tactical, but in either, cash or consideration change hands at the same time with property. Purchasing however has a step further to buying in that, purchasing can be for own consumption or for resale while buying is limited to own consumption.
Purchasing decisions are what to buy, where to buy it, and how much to buy it for.
Procurement has additional responsibilities in the acquisition process. Procurement entails obtaining by various means that include loan, transfer, hire or purchase of supplies and service with or without consideration.
Procurement can avail goods or services before the organisations pays for such. In addition to what, where and how much to buy, procurement decides how much to pay, when to pay and how to pay. Decisions of how much to pay and when to pay requires collaboration with finance to ensure obligations are settled as they become due.
Sourcing is then a term coined to cover activities performed by procurement staff in locating satisfactory and economic sources of supply of goods and services. Sourcing decisions involves determining whether to purchase a good or service from outside organisation or to source it internally. Make or buy decisions are therefore sourcing that is meant to give organisations competitive advantage.
Are you buying, purchasing, procuring or sourcing for your organisation. Engage relevant superiors if otherwise to correct the functional role and alignment.
