0.1Purchasing, procurement and supply chain: who does what?
The essentials in 30 seconds
- Purchasing = strategic: choose the right suppliers and negotiate terms over the medium and long term, before any order is placed.
- Procurement = operational: order at the right time, track deliveries and keep stocks at the right level day to day.
- Supply chain = end-to-end: synchronise the three flows — physical, information and financial — across the whole system.
Running mini-case — Nadia, buyer at an agri-food SME importing to Algiers
Nadia is a buyer at an agri-food SME near Algiers importing packaging and ingredients through the port. She runs everywhere: urgent orders, a late carrier, a missing carton stopping production. This section tells the day she realises she wears three hats — purchasing, procurement, supply chain — and that she sacrifices the first, the most profitable one.
This same case runs through the course, the diagram, the script and the 48h challenge — and continues in 0.2, 0.3 and 0.4.
1. Three roles, three time horizons
Purchasing is the strategic dimension: analysing the supplier market, selecting, negotiating, contracting and managing the supplier panel. The buyer decides from whom and under what conditions the company sources, over the medium and long term.
Procurement is the operational dimension: placing orders, tracking deliveries, chasing late shipments, keeping stocks at the right level. The procurement officer works in the short term, within the framework negotiated by purchasing.
The supply chain is the end-to-end view: from the supplier's supplier to the customer's customer, through production, warehousing, transport and distribution. Thinking supply chain means optimising the whole system, not an isolated link.
2. The three flows to synchronise
A supply chain moves three flows continuously. The physical flow goes downstream: goods move, are transformed and delivered. The information flow moves both ways: orders, forecasts, receipts, stock levels, shipping notices.
The financial flow goes upstream: invoices and payments returning from customer to suppliers. Goods arriving without information (which order? which customer?) is as blocking as information without goods.
Managing the supply chain means synchronising these three flows so they align in time, quantity and quality. Misalignment creates unnecessary stocks, stockouts and invoicing disputes.
3. Who does what depending on company size
In a large company, roles are split: purchasing department, procurement officers, planners, logisticians and supply chain manager. Each has its own KPIs, tools and horizon. Coordination then becomes the central challenge.
In a small business, one person often wears all three hats. The risk is neglecting the purchasing hat — invisible and never urgent — in favour of daily operations. Yet 40 to 60% of revenue goes through purchasing: a few percent gained has a direct impact on margin.
Best practice is to reserve separate time for each hat: a monthly slot to challenge suppliers and renegotiate (purchasing), a daily routine for orders (procurement) and a quarterly review of the overall flow (supply chain).
🔎 Concrete example — The same stockout seen through three lenses
A critical part is missing and production stops. Each hat analyses it differently:
Procurement: "Did I order too late or too little? Was my reorder point correct?" → corrective action on the threshold.
Purchasing: "Is this supplier reliable? Do we need a second source or a contract with penalties?" → action on the panel.
Supply chain: "Does my organisation make this type of stockout likely (long lead time, single stock, late information)?" → action on the whole system.
Section vocabulary
- Purchasing
- Strategic function: supplier market analysis, selection, negotiation, contracting and panel management — decides from whom and under what conditions to buy.
Simple example: Nadia compares two carton suppliers and renegotiates lead times and late penalties.
What it is not: reordering urgently from the same supplier without ever challenging them.
Reflex: block half a day per month to challenge one supplier.
- Procurement
- Operational function: placing orders at the right time, tracking deliveries, chasing, keeping stocks at the right level within the framework negotiated by purchasing.
Simple example: Nadia orders ingredients at the reorder point and chases the carrier.
What it is not: negotiating a new rate over the phone while chasing an urgent delivery.
Reflex: every order logged with date, confirmed lead time and scheduled chase.
- Supply chain
- End-to-end supply chain: from the supplier's supplier to the customer's customer, including production, warehousing, transport and distribution.
Simple example: Nadia maps the journey of her packaging from the foreign supplier to customers delivered from Algiers.
What it is not: optimising only the carton price while ignoring transport and downstream stockouts.
Reflex: look at the overall effect before any local gain.
- Logistics
- Operational component of the supply chain: warehousing, handling, order picking and transportation of goods.
Simple example: Nadia organises receiving, storage and dispatch from the SME's small warehouse.
What it is not: confusing logistics with the whole supply chain (forecasting and purchasing included).
Reflex: check receiving, storage and transport on every delivery.
- Three flows
- Physical flow (goods), information flow (orders, forecasts, tracking) and financial flow (invoices, payments) that the supply chain synchronises.
Simple example: Nadia aligns carton arrivals, the forwarder's shipping notice and the invoice paid in dinars.
What it is not: receiving goods at the port without knowing which order they match.
Reflex: no physical movement without its associated information.
In practice — Map the three hats in your organisation
- List who decides on suppliers and negotiates terms: that's the PURCHASING hat.
- Identify who places orders, tracks deliveries and monitors stock daily: that's the PROCUREMENT hat.
- Draw the full journey of a product, from supplier to end customer, including storage and transport: that's your SUPPLY CHAIN.
- For each hat, note one current strength and one weakness — you have your first improvement priorities.
Ready-to-say script — protect strategic purchasing time
“Every Thursday morning, I block two hours to compare our suppliers and renegotiate, with no urgent orders in between. That is where our margin is won, not in rushing.”
Say to your manager or colleague to ring-fence a purchasing slot separate from daily operations.
Copy-paste template — my three hats
PURCHASING HAT (who / terms) — owner: _______________
STRATEGIC ACTION OF THE MONTH: _______________
PROCUREMENT HAT (when / how much) — owner: _______________
DAILY ROUTINE: _______________
SUPPLY CHAIN HAT (overall flow) — quarterly review on: _______________
MY PRIORITY WEAKNESS: _______________Small business / tight budget
With two people, split the hats in writing: one tracks daily orders, the other blocks 2 hours a month to compare suppliers on a simple spreadsheet.
Algeria SME
Between imports paid in foreign currency, customs clearance at the port of Algiers and local suppliers in the wilaya: note for each purchase the dinar/currency route and the actual lead time observed.
Overloaded multitasker
If urgency crushes everything: move the purchasing ritual off-site (or phone off) and handle a single supplier per session, not the whole panel.
Growing team
From three people up: name one owner per hat even part-time, each with one indicator (purchasing savings, procurement stockouts, overall lead time).
✓ Best practices
- Block half a day per month dedicated solely to strategic purchasing: benchmarking, renegotiating, seeking alternatives.
- Formalise who wears which hat, even with two people: clarity prevents the urgent from crushing the important.
- Map your three flows on one sheet: physical, information and financial must align in time and quantity.
✗ Common pitfalls
- Confusing purchasing and procurement: ordering quickly never replaces having chosen the right supplier.
- Thinking the supply chain only concerns large companies: even a small business has a complete chain.
- Neglecting the information flow: goods without associated information create as much blockage as a stockout.
Key takeaways
- Purchasing = STRATEGIC (choose and negotiate), procurement = OPERATIONAL (order and follow up), supply chain = END-TO-END (orchestrate flows).
- Three flows to synchronise: physical, information and financial.
- Even with one person, distinguishing the hats prevents sacrificing the strategic dimension.
48h Challenge — apply tomorrow
List who wears each hat at your place and block 2 hours this week for the purchasing hat: one supplier to challenge, one offer to compare. Note the potential saving in one line.
- I can define purchasing, procurement and supply chain without hesitating.
- I can name the three flows and say who wears each hat at our place.
- I have blocked a purchasing slot and identified one supplier to challenge.
Frequently asked questions
What is the difference between logistics and supply chain?
Logistics executes the physical movement: receiving, storing, picking, transporting. The supply chain includes logistics but adds overall steering: forecasting, planning, coordination with purchasing and production, network design. Logistics optimises each operation; supply chain optimises the whole system, even if it means accepting a local extra cost for a global gain.
Why distinguish roles when one person does everything?
Because operational urgency absorbs all available time and makes you forget strategic work. By distinguishing hats, you force yourself to devote protected time to purchasing (re-tendering, renegotiation), where a few percent gained often outweighs the effect of higher sales.
Which question belongs to the PURCHASING hat?