Regardless of the type of business you have and the industry that you work in, there is a lot that goes into manufacturing a product. From sourcing raw materials, transporting goods, creating the product and shipping to customers, there is a lot to think about as a business. This is all part of a larger supply chain, which starts with the procurement of supplies. Below, we have taken a look at how procurement and supply chain differ, and how they are related in some ways.
What is Procurement?
Procurement is the process of getting the supplies that you need to run your business, and it centres on getting the goods that you need, such as raw materials, to create the end product. It’s all about purchasing the goods needed to keep up with your business operations, without factoring in the manufacturing or distribution side of things. As part of procurement, you will need to select vendors and determine what supplies need, how much you need and the cost per unit.
What is the Supply Chain?
Like procurement, the supply chain covers the process of getting the necessary supplies to your business, but it goes further than simply acquiring the goods. The supply chain has a larger focus on the extensive infrastructure needed to source the materials your business needs, and how they will be transformed into the end product and sent to customers. It covers manufacturing and distribution, whereas procurement stops before these steps. As part of the supply chain, a business will have to handle the logistics of turning the supplies into the end product and keeping on top of order fulfilment.
How Do They Relate to Each Other?
As you can see, procurement and the supply chain are closely related to one another, but they focus on different aspects of business and manufacturing. Whereas procurement focuses on how materials and supplies get to your business, the supply chain focuses on the manufacturing process that transforms them into the end product. Supply chain also refers to the distribution process of getting the end product to users and fulfilling shipping needs, whereas procurement focuses solely on the business’ needs. There are certainly aspects of the supply chain and procurement that overlap, but they are
Sign up to our newsletter to get the latest from Business Advice.
Regardless of the type of business you have and the industry that you work in, there is a lot that goes into manufacturing a product. From sourcing raw materials, transporting goods, creating the product and shipping to customers, there is a lot to think about as a business. This is all part of a larger supply chain, which starts with the procurement of supplies. Below, we have taken a look at how procurement and supply chain differ, and how they are related in some ways.
