What Is Procurement Supply Chain Management?

Procurement in supply chain management is the process of obtaining the goods and services an organization needs to operate. According to the Association for Supply Chain Management^® (ASCM^®), procurement covers a range of business functions, including planning, purchasing, inventory control, receiving, and incoming inspection, and in many organizations extends further into sourcing, negotiating terms, and record-keeping.¹

In this article, we'll look at what procurement involves, how the process typically unfolds, how it differs from purchasing, and how it may connect to further education.

What Does Procurement Involve in Supply Chain Management?

Procurement helps organizations evaluate purchasing costs, maintain supplier relationships and align purchasing decisions with business goals.¹

According to ASCM, that generally means balancing a few core objectives:¹

• Managing cost by sourcing goods and services at a competitive price
• Building supplier relationships
• Maintaining quality standards
• Managing the risk of supply shortages, price volatility, or unreliable suppliers

What Are the Steps in the Procurement Process?

Procurement processes may vary by organization and purchase, but they often follow a general sequence that ties together supplier selection, contract management, and ongoing supplier relationships.¹ That sequence typically includes:¹

• Identifying an internal need, whether that's a specific good or service
• Creating and submitting a purchase request for approval
• Evaluating potential suppliers and requesting estimates to compare pricing
• Negotiating contract terms, from pricing to service-level agreements
• Finalizing and signing the contract
• Implementing the agreement, including onboarding the new supplier
• Managing the supplier relationship going forward, through ongoing reviews and communication

What This Process May Look Like in Practice

Consider a hypothetical company that makes consumer products and notices its packaging supply is running short. That’s the need. The procurement team submits a purchase request through the company’s approval process, then asks several packaging suppliers for estimates so it can compare pricing, quality, and reliability. After choosing a supplier, the team negotiates terms such as pricing, delivery expectations, and service level agreements, and all parties sign the contract. Once the agreement is in place, the team onboards the supplier and conducts regular supplier reviews to measure performance, such as whether shipments arrive on schedule and meet quality standards. If problems come up, the team communicates the adjustments it needs.¹

Procurement vs. Purchasing: What's the Difference?

Although the terms are sometimes used interchangeably, ASCM distinguishes procurement from purchasing. Procurement is about building the overall strategy for acquiring the goods and services an organization needs long-term, including sourcing, evaluating and selecting suppliers, and negotiating and managing contracts.¹

Purchasing, by contrast, is about carrying out that strategy through specific transactions: issuing purchase orders, receiving goods, approving invoices, and keeping records.¹

What Are the Key Principles of Procurement?

Procurement professionals often rely on a few common frameworks to guide their work. These frameworks can help them check whether a purchase fits what the organization actually needs, compare how well suppliers measure up, and keep procurement activities organized from the first proposal through delivery. One is known as the five Rs:¹

1. Right quality
2. Right quantity
3. Right price
4. Right time
5. Right place

Another framework, sometimes called the five Ps, covers:¹

1. Proposal
2. Planning
3. Pricing
4. People
5. Project management

Broadly, the five Rs tend to focus on what is being purchased, while the five Ps tend to focus on how the procurement itself is planned and managed. Together, these principles highlight the importance of planning, supplier relationships and cost management in procurement.¹

Explore Supply Chain and Logistics Management at Rasmussen University part of American Public University System (“Rasmussen University”)

Understanding procurement is one part of studying how goods and services move through a supply chain. The online Supply Chain and Logistics Management Bachelor's degree at Rasmussen University, for example, includes a course specifically focused on procurement and supplier relations, covering how to source, solicit bids, negotiate, and select suppliers.² If you're interested in building skills relevant to procurement and supply chain work, learn more the program.²

Earning a degree does not guarantee employment or specific job outcomes. Employment conditions in your area may vary.

Association for Supply Chain Management^® is a registered trademark of Association for Supply Chain Management.
ASCM^® is a registered trademark of Association for Supply Chain Management.

¹Association for Supply Chain Management, What is Procurement?, at https://www.ascm.org/topics/supply-chain-procurement/ (accessed Sept. 22, 2026).
²Rasmussen University, Supply Chain and Logistics Management Bachelor's Degree, at https://www.rasmussen.edu/degrees/business/supply-chain-and-logistics-management/ (accessed Sept. 22, 2026).