Recent history has shown that global supply chains and procurement have become increasingly complex to manage and have tested the abilities of organisations, and governments, to better manage these essential services.
Whilst they are interlinked, supply chain management and procurement are two separate things. In this guide, we are going to closely look at what both procurement and supply chain management is, the differences between the two and why they both matter.
eXceeding is a procurement consultancy that was founded on the principle of providing impartial, best practice, procurement advice to organisations of all shapes and sizes. Working with both the public and private sector, eXceeding has years of experience in delivering procurement solutions to the marketplace.
Procurement can be direct, indirect, reactive, or proactive in nature. It is a defined structure, method and technique used by organisations to streamline their purchasing processes of goods, works and materials whilst reducing costs, establishing relationships with suppliers and improving time efficiency in the process.
Procurement is about understanding the needs of the organisations and setting out policies that govern the choice of suppliers, products or services, as well as the methods and procedures that will be used to communicate with their suppliers. Procurement is about selecting the suppliers, negotiating contracts to include agreements on turnaround times and budget requirements.
The procurement process involves:
Managing your procurement processes ensures that all items and services are properly acquired so that projects and processes can proceed efficiently and successfully.
Public procurement contracts (i.e., hospitals, schools, civil service), follow a strict set of rules and regulations. Public procurement law regulates the purchasing by public sector bodies and certain utility sector bodies of contracts for goods, works or services.
There are many different rules that you must follow in order to submit applications for public procurement contracts. Many of which can be found in this government guideline.
There are five principles that govern what procurement is. They include;
A supply chain is however different. A supply chain is a network of manufacturers, suppliers, outsourcing organisations, logistics providers and other people who are involved in getting your product, or service, in the hands of a customer.
A supply chain not only encompasses raw material sources, transportation and warehousing – it also includes all of the tasks and activities involved in moving the product.
Supply chain management (SCM) is the process that ensures all the suppliers in the chain are maintaining the desired level of quality of production. Supply chain management is tasked with understanding when products will be ready when needed and equally reducing inventory at the same time. Supply chain management is about referring to the range of activities from procurement to delivery.
Supply chain management is equally concerned with operational performance and resolving issues. Effective supply chain management is concerned with the optimisation of all aspects of a supply chain.
Procurement refers to the process starting from an identified purchasing need up to the purchase delivery and payment – but no further whilst Supply Chain Management starts with procurement at the first step in the process extending through manufacture and supply of finished products up to final delivery to the consumer.
Here are some other main differences between procurement and supply chain management;
Procurement is the first step of the supply chain management process, in that regard, everything that supply chain management looks to accomplish can only do so based on how well the procurement process has been.
Critically, procurement helps the overall Supply Chain Management process and it does so by;
Procurement refers to the process starting from an identified purchasing need up to the purchase delivery and payment, whilst Supply Chain Management starts with procurement at the first step in the process extending through manufacture and supply of finished products up to final delivery to the consumer.
Supply chain management is about referring to the range of activities from procurement to delivery. Combined they are an essential part of managing the needs of an organisation in delivering goods, works and services and procurement helps increase the quality control as well as support efficient lead time optimisation for the organisation to succeed.
At eXceeding we can help organisations get to grips with their procurement processes and create a strategy that suits them to deliver not only cost savings, but also a streamlined process, saving time and reducing human error in this field. With over a decade of experience and helping global brands such as UNICEF, BGL Group and YMCA improve their procurement strategies, why not drop us a line to see how we can help you achieve your goals.
Check out our procurement ebook for more information about procurement and how we can help deliver value to your business.
Jane has over 15 years’ experience of working in B2B sales and marketing. She oversees the sales strategy for eXceeding, but also directly engages with our clients, to understand their challenges and translate them into a tailored service offer to meet their specific needs.