By Leslie Doyle | 08/18/2025
Many professionals use the term “procurement” and “supply chain” interchangeably, but they serve distinct roles within an organization’s operations. While there is considerable overlap between these two areas of logistics, understanding the key differences between procurement and supply chain management (SCM) is essential for optimizing performance and reducing risk.
Procurement focuses on the strategic sourcing of raw materials to produce various goods or services. It is a crucial part of the overall supply chain process.
In contrast, supply chain management involves the entire supply chain process, including the people involved in creating products and delivering them to market. Supply chain management focuses on various areas, including identifying needs, sourcing materials, manufacturing goods, and shipping products to customers.
Procurement’s Role in Supply Chains
Procurement professionals have various responsibilities that each play a role in the supply chain. Their work includes:
- Sourcing raw materials
- Managing supplier relationships
- Handling contracts
- Using strategic sourcing
- Maintaining sustainability and ethical standards
- Sharing data
Sourcing Raw Materials
Procurement managers help organizations acquire raw materials for creating their products and seek opportunities for cost savings. The procurement process begins with identifying what materials are needed and researching procurement systems and potential suppliers who can meet those needs in a reliable, cost-effective way.
Managing Supplier Relationships
Strong supplier relationship management is vital to procurement and supply chains. To that end, procurement managers find reliable suppliers and build strong supplier relationships over time.
These managers also develop contingency plans by working with multiple vendors to mitigate risk. By finding multiple external suppliers for raw materials, they also help the organization to mitigate risk. For example, when one supplier has an issue fulfilling an order, the company can reduce risk by having another supplier available as a backup.
Handling Contracts and Quality Assurance
Once procurement professionals identify suppliers, they begin contract negotiations. Contracts often outline key performance indicators (KPIs), such as delivery schedules and penalties for noncompliance, so good contract management is essential.
Quality control is another important aspect of a procurement specialist’s role. They are tasked with ensuring that the materials they source meet certain specifications and quality standards.
Using Strategic Sourcing
Strategic sourcing goes beyond finding the lowest price. Procurement managers evaluate suppliers’ capabilities, technological innovation, and ethical practices. This strategy enhances product quality, improves competitiveness, and reduces long-term costs.
Maintaining Sustainability and Ethical Standards
Sustainability is also becoming a key focus for procurement teams. As more consumers look to buy from socially responsible companies, procurement professionals are working harder to identify external suppliers who comply with labor laws, environmental regulations, and corporate social responsibility standards.
Sharing Data
Procurement professionals can contribute to a more responsive, reliable supply chain by sharing valuable data with colleagues and other departments. This information leads to better, more data-driven decisions and cost reduction through improving efficiency.
Understanding Supply Chains and Supply Chain Management
While procurement processes are focused on acquiring raw materials for goods and other procurement tasks, supply chain management encompasses the entire journey of a product from raw material to final delivery. Supply chain managers handle a complex web of processes and people who work together to meet customer demand, whether that work involves a few local supply chains or global supply chain management.
Supply chain managers coordinate supply chain processes such as procurement, production, logistics, inventory, and returns. Their work ensures that goods flow more efficiently from origin to end users throughout the entire process.
Supply chain professionals’ work also includes:
- Inventory and warehouse management
- Distribution and shipping to retailers or consumers
- Reverse logistics, which involves returns, exchanges, and recycling
When done properly, an organization’s overall supply chain efficiency can provide a competitive advantage over other businesses. Optimizing supply chain operations can help organizations to adapt to shifting market needs, lower manufacturing costs, and reduce risk.
Improving Operational Efficiency through Software
Many organizations invest in software to integrate supply chain functions. Having an automated, robust supply chain network enables companies to optimize operations by improving visibility and coordination. Also, automation, real-time tracking, and centralized data contribute to smoother operations across departments.
Data is key to reducing costs. When companies can track demand, monitor supplier performance, and analyze transportation costs, they can make smarter decisions that minimize waste and inefficiency. It is a crucial part of maintaining supply chain efficiency.
Enhancing Customer Satisfaction through Quick Delivery
The Amazon® business model has made consumers accustomed to instant gratification and same-day delivery. This demand for faster and faster delivery puts increased pressure on supply chains and supply chain managers.
To meet these expectations, organizations must optimize production schedules, improve logistics speed, and maintain accurate inventory. Responsive supply chains also help businesses pivot quickly in response to seasonal trends, economic shifts, or geopolitical factors.
Optimizing Business Operations
From sourcing materials to final delivery, each phase of the supply chain offers opportunities for performance improvement and the reduction of supply chain costs. Cross-functional collaboration is key. Internal teams, vendors, logistics providers, and customers must work together to ensure timely fulfillment and quality control.
Reducing Risk
Organizations today face numerous supply chain challenges, ranging from natural disasters to geopolitical conflicts. Additionally, high fuel costs and tariffs have increased expenses for businesses.
Savvy managers use different measures to support risk management and cost management for a more agile supply chain. Through effective contingency planning, they can help to avoid disruptions and cope with unexpected cost increases in procurement and supply chains.
Ensuring Product Quality Control
Part of maintaining brand integrity is verifying that products have the high quality that customers expect. Return and reverse logistics processes provide valuable feedback during the supply chain management process, and tracking returns can identify recurring quality issues and prevent future product failures.
Supporting Innovation in the Supply Chain and Procurement
Faced with increased supply chain disruptions and global competition, businesses need to be innovative with their supply chains to stay ahead of competitors. Many businesses have implemented new supply chain strategies, often leveraging new technologies for automation, decision making, and data analysis.
Robotics, for example, make it possible to automate routine tasks. Predictive analytics allows for better inventory management and reduced overstocks.
Increasing Market Reach
Many businesses have taken their supply chains global, offering products across borders. The lure of cheaper labor and access to more suppliers and customers spurs many businesses to have a global supply chain.
However, this business is not without its challenges. Operating worldwide adds more complexity, requiring interactions with foreign governments, paying tariffs, and complying with regulations. Additionally, managing the logistics of international sourcing, production, and shipping is a vast undertaking.
Procurement and Supply Chain Management and Collaboration
Procurement and supply chain management strategies are essential to allow for two-way communication between procurement teams and supply chain management.
When procurement and supply chain teams share information and insights, they are better equipped to:
- Minimize supply chain disruptions
- Provide better inventory management to meet customer demand
- Gain operational efficiency through smoother procurement processes
- Ensure quality control
- Identify cost savings opportunities
For example, supply chain systems can alert procurement managers to real-time data about current orders and emerging market demands that may require changes in procurement strategies. Likewise, procurement can notify supply chain managers of potential material shortages or other risks that could impact the supply chain further downstream. In this way, procurement and SCM strategies must be tightly interconnected.
Supply Chain and Procurement Managers Need Strategic Thinking for a Competitive Edge
Supply chain management is more than just procurement, manufacturing, shipping, and delivery. To truly help organizations be more competitive and reduce risk, supply chain managers must be strategic. To that end, their role requires:
- Long-term planning
- An understanding of how technology improves supply chain operations
- Extensive contingency planning for a more resilient supply chain
The importance of linking procurement and supply chain processes and data together cannot be overstated. Companies that fully integrate systems and bring together employees from different departments can realize numerous benefits from having a more agile, efficient supply chain.
The B.A. in Supply Chain Management at AMU
Are you interested in a supply chain management career path or do you want to upskill your abilities? American Military University (AMU) offers an online Bachelor of Arts in Supply Chain Management, designed for students who want to learn about the principles of supply chain management, supply chain risk management, global demand management, and other related topics. Courses in this degree program are taught by experienced faculty members with a deep knowledge of the supply chain management and reverse logistics industries.
This bachelor’s program in supply chain management has earned specialty accreditation from the Accreditation Council for Business Schools and Programs (ACBSP®). This type of accreditation ensures that this degree program has been examined by higher educational professionals for high quality.
For more information on the bachelor’s degree in supply chain management degree program, visit AMU’s business administration and management degree program page.
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