First, make sure you distinguish between purchasing and procurement. Purchasing is the process of identifying a requirement such as an ongoing need for goods, soliciting competing prices as well as terms and conditions associated with the purchase, placing the order, and receiving the goods or service. The goods may be direct, such as raw materials used in manufacturing products.
Procurement describes a process that encompasses purchasing but also goes far beyond it.
Procurement takes a total business perspective that begins with the process of establishing the need in the first place. The process continues with planning, which includes demand forecasting, then the actual purchasing process, receipt and payment, and finally, tracking vendor performance over time. Consider an automobile manufacturer that wants to introduce a sleek new sports car to the market but will have to engineer a new front-suspension system to achieve a low profile. Once the design has been accepted and plans for actual production of the vehicle are made, sales forecasts must be translated into production schedules, which are negotiated with the supplier. Deliveries are scheduled based on the production plan, goods are received, and payment is made.