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Procurement is just a cycle from the SC management. Supply Chain has different cycles and clustors among-which it includes procurement
What is Supply Chain?
A supply chain is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer. Supply chain activities involve the transformation of natural resources, raw materials, and components into a finished product that is delivered to the end customer. Basically, everybody involved in getting your product in the hands of a customer.
What is Procurement?
It is the act of acquiring, buying goods, services or works from an external source. It is favourable that the goods, services or works are appropriate and that they are procured at the best possible cost to meet the needs of the acquirer in terms of quality and quantity, time, and location. 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.
To explain the difference between Supply Chain and Procurement let us use the "chair" analogy. Supply chain is seen as the entire chair and Procurement and its subsections like Sourcing are seen as the legs in support.
Supply Chain management deals with the end to end processess in relation to customer requirements. This will include the warehousing, inventory management, operations and logistics.
Procurement will in most cases, refer to asset (non-supply chain) management and therefore different streaming. Purchasing will in most cases, relates to the supply chain requirements from end to end. This would include inventory, consumeables, services and logistics.
Procurement by nature, will generally by aligned to the finance department, whereas purchasing will come under the banner of Supply Chain functions..
Supply chain management has a broad spectrum from Upstream (warehousing) to dwnstream (end consumer) which invlolves Procurement, Warehousing, Supplier Development, Manufacturing Operations, Quality Assurance / Quality Control, Logistics. Whereas, procurement is only one function in the entire supplychain.
Hello
Procurement belongs to finnancial department even to know the finnal rate on the finnaicial balance sheet.
Purchasing is a part of the SCM as a operating process of the business.
Regards.
RR.
Procurement:
Procurement means planning and purchasing, where the pricing is mostly done centrally and the Procurement Executive normally is involved in procuring the item from pre-decided suppliers at an already decided / fixed price.
In most cases, the procurement is made from suppliers shortlisted and nominated based on the Tender process, or fixed contract basis where the product specifications /quality, quantity, and price are linked and pre fixed.
His responsibilities include planning and coordination with the supplier and follow up for the supply at the right time, quantity, quality.
He may in some cases monitor the supplier’s performance and report the same to the Central Purchasing / Material Depts.
Supply Chain Management:
Is a much bigger functional area, where the entire responsibility of the supply chain right from finding the right supplier, his capabilities to supply the required item, deciding the price, monitoring the supplier and developing him to progress to the next level with mutual benefits, as the partnership moves ahead.
In some companies like the automobile industry specifically in Japan / USA / Germany etc the involvement of the outstanding suppliers, based on their R&D capabilities are involved right from the development of new products or the so called “drawing board”.
Further coordinate and follow up for the transportation as well as delivery of the product to the warehouse or directly on line following the Just In Time principle.
The supply Chain Manager overseas various functions like:
· Planning
· Vendor / Supplier identification
· Supplier Capability Assessment
· Product Quality
· Product Pricing
· Supply and Delivery Schedules
· Delivery Transportation (Logistics)
· Monitoring Supplier Performance –Delivery, Quantity and Quality
· Supplier Gradation and Development
You may revert for further insights / clarifications / discussions on the subject.
Procurement is the process of getting the goods you need , while supply chain is the infra structure needed to get these goods. Normally we use terms associated with procurement like purchasing , supply chain managment as the same , they are related but they are not interchangeable there is a distinct defference between procurement and supply chain management.
Sorry for answering late...
SCM is a study of different domains from consumer’s requirements to consumption. Procurement is one domain that forms a big part of SCM. However, procurement does not concerned marketing, logistics, production and other major domain. Unlike SCM, management needs to collaborate all data and prerequisites. I hope that make sense.
