Beginner Reads – Procurement Vs Purchasing in SAP
Procurement and purchasing are related terms that are often used interchangeably, but they have distinct meanings and implications for an organization’s operations and processes.
- Procurement refers to the overall process of acquiring goods and services from external suppliers. This process encompasses all of the activities involved in sourcing, negotiating, and acquiring goods and services from external providers. Procurement activities can include market research, vendor selection, contract management, and supplier relationship management.
- Purchasing, on the other hand, refers specifically to the act of buying goods and services from external suppliers. This is typically the final step in the procurement process and involves the issuing of purchase orders, the receipt of goods and services, and the payment of invoices.The purchasing department would use the procurement process to find a suitable supplier, negotiate the best price and delivery terms, and then issue a purchase order for the item. The actual transaction of buying the item would be considered the purchasing step.
In summary, procurement is a broader term that encompasses all of the activities involved in sourcing and acquiring goods and services from external suppliers, while purchasing is a specific part of the procurement process that involves the actual buying of goods and services.
Now coming to SAP, the procurement process and purchasing activities are typically managed using the SAP Material Management (MM) module. The MM module provides a range of tools and features for managing all aspects of procurement, including material and vendor master data management, purchase requisitioning, request for quotation, purchase order processing, goods receipt and invoice verification, and inventory management.
The MM module integrates with other SAP modules, such as Sales and Distribution (SD) and Production Planning (PP), to provide a comprehensive and integrated solution for managing procurement and supply chain processes.
Additionally, SAP offers an advanced procurement solution, called SAP Ariba, which is a cloud-based procurement platform that provides advanced capabilities for sourcing, contract management, supplier management, and spend analysis. SAP Ariba integrates with the MM module in SAP to provide a comprehensive and integrated solution for procurement