What is the Difference between Supply Chain and Procurement?

The terms Supply Chain and Procurement are the buzz words and strategies shared around the Private and Public sector but what do they mean? Understanding the terms, helps you better understand and leverage the different aspects of these important parts of your business.

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.

Tagai Management Consultants has the expertise and resources to work with your team to either develop, sustain, grow and/or improve your Supply Chain and/or Procurement Framework via Capability or Learning to your Department, business, organisation and community.

When you are ready contact Tagai Management Consultants and let us discuss appropriate strategies for you.

I will introduce in a later blog the subsections of Procurement: Sourcing and Global Sourcing.