What is Procurement?
Procurement refers to all activities and processes by which a company provides the required goods and services at the right time, in the right quantity, in the right quality and on favourable terms.
The definition usually goes beyond „just ordering“. Depending on the organisation, procurement also includes:
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- Requirements planning and needs assessment
- Selection of suitable sources of supply
- Coordination of delivery and performance
- Quality and risk assessment
- Cooperation and management of suppliers
Procurement can be operationally, tactically or strategically orientated. Depending on company size, industry and process model.
Importance of procurement: Why it is a strategic success factor
The importance of procurement has risen sharply in recent years, partly due to global supply chains, price fluctuations, stricter compliance requirements and higher transparency requirements in finance.
Professional procurement has a direct impact:
- Cost structure (purchase prices, total cost of ownership, process costs)
- Delivery capability (availability, delivery times, alternatives)
- Quality (specifications, complaint rates, proof of performance)
- Risk (dependencies, default risks, regulatory requirements)
- Competitiveness (time-to-market, scalability, resilience)
Short:Procurement is not just „support“, but a key lever for performance, growth and stability.
In practice, the two terms are often used interchangeably. The decisive factor is not so much the label, but the clarity of the process: who does what and who bears what responsibility?
The last point in particular is often underestimated: without clean procurement data, approvals, invoice verification and payment processes become unnecessarily complex.
Procurement objectives
The objectives of procurement vary depending on the industry and company phase, but follow typical core objectives:
- Security of supply: ensuring availability, avoiding bottlenecks
- Profitability and cost optimisation: reduce prices and process costs, improve TCO
- Ensuring quality: guaranteeing specifications, delivery quality and performance
- Minimise risks: Reduce dependencies, create alternatives, avoid compliance risks
- Transparency and controllability: making expenses, contracts, suppliers and processes measurable
- Sustainability and compliance (depending on the context): Fulfil standards, documentation obligations and guidelines
These goals show: Procurement is a control lever, not just an operational ordering process.
Connection between procurement and purchase to pay
Procurement is often the starting point of an end-to-end chain: demand → order → delivery → invoice → payment. If procurement data is clean (structured orders, clear approvals, unambiguous supplier data), downstream areas benefit noticeably:
- Fewer queries and deviations
- Faster releases
- Fewer manual corrections in Finance
- Better transparency in reporting
This is precisely why many companies are digitalising and standardising their procurement as the basis for end-to-end processes.
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Frequently asked questions about Procurement
What is procurement?
Procurement encompasses all activities to supply a company with the goods and services it needs (in terms of time, quantity, quality and cost).
What is the difference between procurement and purchasing?
Purchasing is often narrower (negotiation/ordering). Procurement is often broader (including planning, coordination as well as risk and quality aspects). In practice, however, the terms are often used interchangeably.
What is procurement?
Procurement is the English term for purchasing/procurement. Depending on the context, it either refers to the purchasing area or the entire procurement process with governance and standards.
What are typical procurement tasks?
Determine requirements, select suppliers, negotiate conditions, control orders, manage quality and risks and provide clean support for the process chain through to finance.
What are the objectives of procurement?
Security of supply, cost and process optimisation, quality, risk minimisation, transparency and controllability (supplemented by sustainability/compliance if necessary).