In order to understand the difference between procurement and logistics, we must think of procurement and logistics as the yin and yang of the supply chain. Just like yin is somewhat same but different from yang, procurement is different from logistics. Procurement means you have to buy and purchase goods while logistics is the storage, movement and operations around the utilization of purchased goods. Procurement is a financial function for a company that accounts for around more than 70 percent of the company’s cost of doing business.
Procurement means all kinds of purchasing whether it is developing quality standards, financing the purchases, and negotiating the price while buying goods. This ensures that adequate inventory is available.
Logistics on the other hand is the process through which the purchases are delivered at the right time. Logistics is basically that part of the supply chain management that implements, plans and controls the storage of goods and services. It is the management of information between the point of origin to the point of consumption in order to meet the customer’s requirements.
Supply chain management is about understanding all variables to deliver goods and services within the allocated budget. To help you understand briefly, procurement is the preparation and processing of a demand. It involves activities like planning the purchase, selecting the right suppliers, using inventory control and storage while logistics involves transporting goods, coordinate storage and accommodate the goods.
This was a brief overview of the basic difference between procurement and logistics. We will now take a look at the differences between procurement and logistics in greater detail:
It is the detailed organization of a complex operation. As said earlier, if we put it simply it helps manage the flow of things between the original point to the point of consumption. Logistics help meet the customer requirements in the timeliest and cost-effective manner.
Procurement is the method of discovering and agreeing to terms and purchasing goods from an external source. When a government agency buys goods and services, it is called public procurement. It involves every activity in obtaining goods and services that help support daily operations which includes sourcing, negotiating terms, costs and purchases that help receive the relevant items. Procurement supply chain management draws up strategic plans with suppliers that help support the development of new products. Activities related to obtaining products and materials from outside suppliers involve inbound transportation, and quality assurance.