Procurement and Supply

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What’s the Difference Between Procurement and Supply?

Procurement and supply are crucial, strategic processes that form the basis of day to day operations in many companies. To put it simply, without procurement and supply the work of many organisations and companies would grind to a halt. In some companies, their very survival as sustainable, profit-generating enterprises would be under threat.

If you’re thinking of pursuing a career in this lucrative and diverse field, you’ve probably started to gather a lot of questions. For most people, there’s an obvious question that springs up as you first start researching the industry - what’s the difference between procurement and supply?

In this blog, we aim to explore the topic in detail, and hopefully give you a great understanding of how procurement and supply are similar, how they are different and how you can use this knowledge to develop your own expertise and skills when it comes to your career. 

What is procurement and supply?

Procurement and supply are two separate, but closely related specialisms in an area called supply chain management.

As this article by Investopedia explains, supply chain management is all about managing how goods and services move from one company to another. This humble process is the bedrock of the operations of most organisations, particularly those which manufacture or distribute products for sale or those which sell services. Without it, companies would be incapable of operating. This is what makes professionals who work in procurement and supply some of the most sought-after employees in the modern workplace.

Investopedia cites five basic steps that define supply chain management:

  • Plan – Working out how you will match supply to demand
  • Source – Finding the raw materials to make the product or service that you want to sell
  • Make or Produce – Designing, creating and testing the product or service
  • Distribute – Getting the finished product or service to customers
  • Return – Dealing with products or services that are returned by customers

Of course, supply chain management is more important to some companies than others. Even organisations which don’t operate on a for-profit basis are still reliant on careful management of supply chain processes in order to keep their operations functioning well.

Girl With Checklist

Procurement and supply form an essential aspect of supply chain management: they are arguably two of the most important elements of it. Now we’ve given you a basic overview of supply chain management, let’s drill down a bit deeper and explore how procurement and supply fits into it.

What is procurement?

Procurement is a surprisingly broad and complex specialism in a company.

At first glance, you’d be right to think that procurement simply refers to the process of acquiring goods, products or services – usually for the purpose of ultimately selling them on, or creating a product or service from them which can be sold. A professional will ‘procure’ these items for an organisation, carrying out all of the crucial behind the scenes work to make sure that it’s done so in an efficient, profitable and ethical way. It’s different than simply just the process of buying things though. Procurement is a long-term process that calls for a range of specialist skills, from interpersonal skills to build relationships with suppliers, through to negotiation and relationship management to ensure that supply chain management runs smoothly.

Procurement can be categorised in different ways and it’s essentially made up of different parts. The Chartered Institute of Procurement and Supply, one of the UK’s leading professional membership bodies for the procurement and supply fields, defines the role of procurement as being ‘to procure products or services at the right place, for the right price, to the right quality and quantity and delivered at the right time.’

CIPS divides the specialism into two types:

Direct procurement

This is essentially the type of procurement that most of us are familiar with. Direct procurement is all about sourcing and buying (or ‘procuring’) the basic materials that you’ll need to produce a product or a service. If you work in this type of procurement role, you’ll have to organise buying materials in bulk and from different suppliers, carry out quality control to ensure that these materials meet the required standard and negotiate a competitive price on them. 

Indirect procurement

Whilst direct procurement involves purchasing products and services that are directly involved in the production process, CIPS defines indirect procurement as the process of buying services that are essential for day-to-day operations in an organisation, but that aren’t directly used in manufacturing. It cites procuring machinery, computers, and energy and utilities as typical examples of some types of indirect procurement.

When taking this into account, the role becomes much more broader than the thing we typically think of when we think about procurement in an organisation.

What is supply?

As we’ve seen, procurement mainly refers to the process of physically acquiring specific materials that can then be turned into products and goods. Supply on the other hand refers to the specific management of the supply chain as a whole.

Supply is basically short-hand for ‘supply chain management’. As we explored at the start of this blog, the supply chain is a process in which items, products and services move from one organisation to another or a final customer. It’s the bedrock of most organisations that make money through producing items or offering services.

Whilst procurement generally only deals with the process of buying materials, supply is more focused on how those materials can be made into products that can be sold. In effect, supply is about managing the process of manufacture, rather than only managing the process of buying raw materials.

As a result, supply chain management deals with the day-to-day management of a whole range of moving parts: from logistics and transport through to warehousing and employee management.

Why choose a career in procurement and supply?

Sometimes it can seem that procurement and supply unfairly slips under the radar of a lot of professionals looking for a fulfilling, rewarding and well-paying career. To be brutally honest, the name ‘procurement and supply’ can seem slightly dry to the casual outsider. When you delve deeper into the details of the role though, it becomes much clearer that procurement and supply offers professionals the chance of a truly impressive range of roles to choose from, with great room for progression in most of them.

A career in procurement and supply is diverse, varied and great for people who feel that they get bored in roles where they just perform one task over and over again.

Pay and benefits are incredibly competitive, reflecting the high demand that procurement and supply professionals are held in by employers. The CIPS Procurement Salary Guide 2023 cites an average wage of £53,359 for experienced professionals who work in the field.

Starting a career in procurement and supply

The best way to get your foot on the ladder when it comes to an entry-level role in procurement and supply is to study a dedicated professional qualification in the area. CIPS, the professional membership body that we’ve mentioned throughout this blog, offer a range of specialist qualifications in procurement and supply, designed for professionals at all levels of their career.

If you’re coming into the area without any prior experience or knowledge of procurement and supply, the CIPS Level 3 Advanced Certificate in Procurement and Supply Operations will give you a great grounding in all the essential knowledge that you’ll need to start a successful career. If you're at a more developed stage of your career, the CIPS Level 4 Diploma in Procurement and Supply or the CIPS Level 5 Advanced Diploma in Procurement and Supply

Explore the world of procurement and supply

We hope you’ve found this blog useful in exploring the difference between procurement and supply. Remember that procurement and supply are two separate, but closely related, topics. They are both mutually dependent on each other – you couldn’t have one without the other. Good luck with your journey!

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