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Meaning of purchasing and procurement

Short answer

Purchasing is the act of buying materials/services with the five rights (right quality, quantity, price, source, time). Procurement is a broader process covering planning, sourcing, tendering, contracting, receipt, and disposal, governed in Nepal by the Public Procurement Act, 2063. Procurement includes purchasing but also strategic supply management.

What do you mean by purchasing and procurement?

Purchasing

Purchasing is the act of buying materials, goods and services from outside suppliers for use in an organization, at the right quality, quantity, price, time and source. It mainly covers the buying activity: selecting suppliers, negotiating, issuing the order and payment.

Procurement

Procurement is a wider term that covers the entire process of acquiring goods, works and services, including planning needs, specifying requirements, selecting sources, bidding, contracting, receiving, inspection, payment, contract management and disposal. It also covers purchasing of construction work and consulting services. In Nepal it is regulated by the Public Procurement Act, 2063 and its Regulations, 2064, with the Public Procurement Monitoring Office (PPMO).

BasisPurchasingProcurement
ScopeNarrow; buying activityBroad; whole acquisition cycle
FocusTransactionStrategy and relationships
IncludesOrder, pricePlanning, sourcing, contract, disposal

Example: A hospital ordering oxygen cylinders is purchasing; planning annual needs, running a tender, signing a contract and managing supplier performance is procurement.

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