Procurement and Supply Chain Management: Comparison, Features and Benefits
When people hear the terms "procurement" and "supply chain management," most people believe that the two are the same. After all, both are concerned with materials and goods. But they are not the same.
Yes, they work closely. Yes, they support each other. But they have very different tasks within a business.
For instance, procurement focuses on buying the right products at the right price, whereas supply chain management is involved in taking care of the overall process of goods, which includes sourcing until the final delivery.
Understanding the difference between procurement and supply chain management functions is important. It helps businesses in managing expenses, preventing delays, enhancing efficiency, and ensuring timely delivery of products.
In this article, we will understand procurement and supply chain management, how procurement in supply chain management fits into operations, and why both functions must work together.
By the end, you will find it easier to comprehend how procurement and supply chain can collaborate with each other—and how their effective use can provide your business with a significant competitive edge.
Overview of Procurement?
Procurement refers to the process of seeking suppliers, negotiating a deal, and purchasing goods and services in the most appropriate manner.
What Procurement Does
This is what the procurement teams tend to do:
Identify Needs: They ask, “What do we need? Why do we need it? When do we need it?” This procedure will prevent rush-hour purchasing and supports better procurement strategies in supply chain management.
Find Suppliers: The procurement verifies numerous suppliers. They draw comparisons on quality, price, and reliability.
Negotiate: They also negotiate with suppliers and score the best deal. This maintains low costs and high value.
Create Contracts: Establishing guidelines comprises prices, schedules, and quality.
Supplier Relationship Management: They monitor the performance of suppliers. In case of a wrong, they correct it.
Approve and Pay Bills: The procurement collaborates with Finance and Accounts Payable to verify invoices and disburse payments.
Also nowadays, companies use advanced ERP supply chain software to automate and streamline key procurement activities. It connects purchasing, supplier management, and inventory control into a single, cohesive system.
By centralizing these functions, procurement software enhances transparency, reduces manual paperwork, and improves overall efficiency in the purchasing lifecycle.
Also Read: ERP Procurement
Below are some of the top software that companies use:
- Dynamics 365 Supply Chain Management
- Ivalua
- Tipalti
- SAP Concur
Overview of Supply Chain Management (SCM)
Supply chain management encompasses the entire process of product, starting with raw material all the way to the consumer. It involves planning, creating, storing, transporting, and delivering items.
What Supply Chain Teams Do
Plan Demand: They predict the quantity of stocks required.
Manage Inventory: They keep the right amount of goods—not too much, not too little.
Handle Production: They transform raw materials into finished products.
Run Warehouses: They depend on a robust warehouse management system to store and put goods in place in a safe manner.
Manage Transportation: They transport goods to their appropriate location when they are required.
Manage Returns: In case returned items are sent by customers, they are taken care of by the supply chain.
Moreover, SCM teams use advanced systems to manage the entire flow of products and information from the product development stage to actual order fulfillment through an extensible set of tools for production planning, demand planning, inventory forecasting, and transportation management.
These solutions help deliver products faster, reduce costs, and improve customer satisfaction.
Below are some of the top software that companies use:
- Dynamics 365 Supply Chain
- SAP
- Oracle
- Blue Yonder
Relationship Between Procurement and Supply Chain
Although procurement and supply chain management are not similar, they rely on one another. Like procurement procures things, and the supply chain transports things.
The supply chain is not something that procurement is not a part of. The supply chain cannot operate without procurement, and procurement cannot operate without the supply chain.
That is, when the procurement purchases low-quality products, the supply chain is hurt. Similarly, when the supply chain is not properly planned, procurement will fail to purchase the correct quantity.
Both are to communicate, exchange information, and strategize.
When procurement and SCM work well together:
- Products arrive on time
- Costs stay low
- Waste is reduced
- Customers get what they want
This cooperation strengthens the entire business.
After knowing what the relationship between them is, it is time to learn to know about the features and advantages of each.
Also Read: ERP System
Features of Procurement
Clear supplier selection: Selecting the right supplier by eliminating unethical procedures.
Strong negotiations: Negotiating with suppliers to have the best price without compromising quality. Negotiation is a fundamental skill in procurement.
Contract and compliance management: Ensuring all suppliers comply with the contract and the laws.
Transparent purchasing: All purchases are transparent, traceable, and legitimized.
Supplier risk control: Reducing risks such as delays, quality problems, or changes in prices and rectifying them at an initial stage.
Integration with Finance: Procurement works closely with the finance department, and thus the budgets, expenditures, and payments remain balanced.
Use of ERP procurement software: Automation of buying, contracts, approvals, and supplier data with the help of such advanced solutions as Dynamics 365 Business Central.
Benefits of Procurement
Lower Costs: Money is saved through good planning and good purchasing.
Better Supplier Access: Procurement makes sure that you never run short of the material.
More Transparency: Clarity of rules and steps that prevent confusion and fraud.
Lower Supplier Risk: Procurement checks suppliers carefully to avoid problems.
Stronger Supply Resilience: The procurement identifies backup suppliers to be on the safe side.
More Innovation: New ideas are introduced through positive supplier relations.
Long-Term Value: Procurement aims at quality, reliability, and future development—not immediate gains.
Features of Supply Chain Management
Planning Everything Together: SCM combines procurement and production, along with logistics and inventory, into a single plan.
Real-Time Visibility: Advanced systems, such as Microsoft Dynamics Supply Chain Management, enable you to view inventory, shipments, and delays in real time.
Customer-Centric Delivery: Today, customers desire to have a speedy delivery. SCM helps make that happen.
Agility and Quick Response: With the help of forecasting and analytics, SCM adapts to demand changes.
Smart Inventory Control: There are models such as JIT (Just-in-Time) and VMI (Vendor-Managed Inventory) that prevent overstock and stock-out.
Technology Use: Accuracy and speed are enhanced with AI, blockchain, IoT, and cloud tools.
Sustainability: Modern supply chain management software reduces waste and carbon emissions.
Benefits of Supply Chain Management
Risk Control: SCM assists in planning against suppliers’ problems, natural events, or market changes.
Lower Costs: Smart planning and inventory control reduce waste.
Strong Compliance: It makes every partner adhere to legal and ethical regulations.
Happier Customers: Trust is created by fast and accurate deliveries.
More Flexibility: SCM helps companies to move swiftly in a changing market.
Better Decisions: The insights that data provides can guide the leaders to make the most appropriate decisions.
Now it’s time to understand the difference between procurement and supply chain management
Procurement vs. Supply Chain Management—Comparison 2026
| Aspect | Procurement | Supply Chain Management (SCM) |
|---|---|---|
| Core Focus | Purchasing of the right goods and services with the best value | Overseeing goods, information, and resources flow across the entire supply chain |
| Primary Goal | Reduction of costs, quality of suppliers, efficiency of contracts | Satisfaction of customers, efficient flow of products, fewer delays |
| Scope of Work | Sourcing, supplier evaluation, negotiation, purchase orders, contract management, and invoice approvals | Demand planning, production scheduling, inventory control, inventory tracking, warehousing, transportation, and distribution |
| What It Controls | Vendor relationships, pricing, terms, compliance, and risk in purchasing | Material flow, logistics, storage, production schedules, delivery schedules |
| Time Horizon | Short- to mid-term (immediate buying requirement or annual contracts) | Mid- to long-term (forecasting, production planning, long-term supply strategies) |
| Key Metrics (KPIs) | Cost reduction, supplier performance, contract compliance, and purchase cycle time | Lead time, inventory turnover, order accuracy, logistics cost, and on-time delivery |
| Main Responsibility | Choosing the suppliers, negotiating the terms, and getting what the business needs procured correctly | Coordinating the whole chain that includes suppliers and customers to ensure good flow |
| Risks Managed | Price fluctuations, supplier failures, contract disputes, and compliance issues | Logistics delays, production bottlenecks, demand-supply imbalance, and stockouts |
| Department Involved | Legal, finance, procurement team, vendor management | Supply chain planning, operations, warehouse team, logistics, and manufacturing |
| Result | Secure the best suppliers and the best value | Make sure there is a smooth flow of goods between raw materials and the customers |
| Dependency | It relies on supply chain forecasts on what to purchase | It relies on the procurement as a means of getting the materials in time |
The ongoing debate of supply chain or procurement disappears once roles are clearly defined:
Note: Both functions coexist within the broader framework of procurement in supply chain management.
Final Thoughts
Procurement and supply chain management are not alike, and one cannot work without the other. The combination of the two makes a business stronger, faster, and smarter.
Moreover, the current modern supply chain management software help businesses integrate procurement and supply chain into an integrated, powerful platform. Also, if you have a small- or mid-sized business and you want a simple, affordable, yet powerful solution, then you must go for Business Central. This enhances better planning, minimizing risks and having better control over the expenditure and operations.
But to streamline everything, organizations need the right systems and the right partner, and in the list of top experienced leaders, Dynamics Square ranks first.
Our team helps clients with Dynamics 365 implementation that makes procurement easier, automates routine activities, enhances transparency of the spending process, and keeps the whole supply chain connected.
Also, with Dynamics Square, businesses experience easier workflows, fewer manual errors, faster approvals, and better decision-making, all with a setup tailored to their process, not the other way around.
Are you one that wants to streamline your procurement and supply chain?
You can reach us either by a call at +1 778 381 5388 or by email at info@dynamicssquare.ca and begin your transformation today.
People Also Ask:
What is Procurement and Supply Chain Management?
Procurement ensures that you purchase the right item at the right price from the right supplier. Whereas SCM ensures that those things are transferred appropriately between the supplier and customers.
What are the 4 types of procurement?
There are four types of procurement.
- Direct procurement
- Indirect procurement
- Goods procurement
- Services procurement
“With over 10 years of experience in the tech domain, Mukesh Jha is a skilled content expert at Dynamics Square. He leads the content creation process with a focus on making complex topics easy to understand and ensuring the content is up to date. Every piece of content created under his supervision offers deep and valuable insights related to technology.”
