Procured Service vs. Procurement Process

Attribute	Procured Service	Procurement Process
Definition	Service obtained from an external provider	Process of acquiring goods or services from an external source
Scope	Specific service being acquired	Overall process of acquiring goods or services
Objective	Obtain a specific service to meet a need	Efficiently acquire goods or services at the best value
Provider	External service provider	External supplier or vendor
Contract	Service agreement or contract	Procurement contract or agreement

Introduction

Procurement is a crucial aspect of any business operation, as it involves acquiring goods or services from external sources. Within the realm of procurement, there are two key components that play a significant role in the process - procured service and procurement process. While both are essential for the successful functioning of a business, they have distinct attributes that set them apart. In this article, we will compare the attributes of procured service and procurement process to gain a better understanding of their roles in the business world.

Procured Service

Procured service refers to the acquisition of services from external vendors or service providers to meet the needs of a business. These services can range from consulting and IT services to maintenance and repair services. One of the key attributes of procured service is that it is intangible in nature, meaning that it cannot be physically touched or seen. This makes it different from procured goods, which are tangible products that can be physically inspected before purchase.

Another attribute of procured service is that it often involves a high level of customization to meet the specific requirements of the business. Service providers work closely with their clients to understand their needs and tailor their services accordingly. This personalized approach ensures that the procured service aligns with the business objectives and delivers the desired outcomes. Additionally, procured service is often characterized by a service level agreement (SLA) that outlines the terms and conditions of the service, including performance metrics and quality standards.

Furthermore, procured service is typically delivered over a period of time, rather than being a one-time transaction. This ongoing relationship between the business and the service provider allows for continuous improvement and optimization of the service delivery. It also enables the business to adapt to changing market conditions and evolving business requirements. Overall, procured service plays a vital role in enhancing the operational efficiency and effectiveness of a business by leveraging external expertise and resources.

Procurement Process

The procurement process, on the other hand, refers to the series of steps involved in acquiring goods or services from external sources. It encompasses activities such as identifying procurement needs, sourcing suppliers, negotiating contracts, and managing supplier relationships. One of the key attributes of the procurement process is that it is a structured and systematic approach to purchasing, aimed at achieving cost savings, quality improvement, and risk mitigation.

Another attribute of the procurement process is that it is governed by a set of policies and procedures that ensure transparency, fairness, and compliance with regulations. These policies and procedures outline the roles and responsibilities of various stakeholders involved in the procurement process, as well as the criteria for supplier selection and evaluation. By following a standardized procurement process, businesses can minimize the risk of fraud, corruption, and unethical practices.

Furthermore, the procurement process is often supported by technology tools and systems that streamline the procurement activities and enhance efficiency. These tools enable businesses to automate routine tasks, track procurement performance, and generate reports for analysis. By leveraging technology in the procurement process, businesses can improve decision-making, reduce cycle times, and optimize resource allocation.

Moreover, the procurement process is a collaborative effort that involves cross-functional teams working together to achieve common goals. These teams may include representatives from various departments such as finance, legal, and operations, who bring their expertise and perspectives to the procurement process. By fostering collaboration and communication among team members, businesses can ensure that the procurement process is aligned with the overall business strategy and objectives.

Comparison

While procured service and procurement process are distinct components of the procurement function, they are interconnected and complementary in nature. Procured service focuses on the acquisition of services to meet specific business needs, while the procurement process involves the systematic approach to acquiring goods or services. Both play a crucial role in enhancing the operational efficiency and effectiveness of a business by leveraging external expertise and resources.

One key difference between procured service and procurement process is the nature of the deliverables. Procured service involves intangible services that are customized to meet the specific requirements of the business, while the procurement process deals with tangible goods or services that are acquired through a structured process. This difference in deliverables impacts the way in which businesses approach the procurement function and the strategies they employ to achieve their procurement goals.

Another difference between procured service and procurement process is the level of complexity involved. Procured service often requires a high level of customization and collaboration between the business and the service provider, whereas the procurement process follows a standardized approach with defined policies and procedures. This difference in complexity influences the resources, skills, and expertise required to successfully manage procured service and procurement process.

Despite these differences, both procured service and procurement process share a common goal of achieving cost savings, quality improvement, and risk mitigation. By effectively managing both components, businesses can enhance their competitive advantage, drive innovation, and achieve sustainable growth in the dynamic business environment. It is essential for businesses to recognize the unique attributes of procured service and procurement process and leverage them strategically to achieve their business objectives.