What is Procurement: understanding its types, process, and technological impact

Procurement is how a company buys the goods and services it needs to operate. If you are new to it, this guide covers what procurement is, the main types, the steps involved, and how it differs from purchasing.

What is procurement?

Procurement is the full process of acquiring goods and services, from working out what you need to choosing suppliers, agreeing terms, and managing those relationships over time. Purchasing, the act of placing the order, is one part of it. Done well, procurement gets a company the right resources at fair terms without surprises later.

Types of procurement

What procurement looks like depends on the industry, the company’s size, and what is being bought. The common types are:

• Direct: raw materials and goods that go into the product itself, like a car maker buying steel.
• Indirect: things that keep the business running but aren’t part of the product, like office supplies, maintenance, or software subscriptions.
• Services: buying work rather than goods, from temporary staff and consultants to cleaning and catering.
• Goods: physical items outside direct procurement, like office equipment, uniforms, or IT hardware.

Steps in the procurement process

Most procurement follows the same sequence:

• Identify the need for a good or service.
• Research suppliers and pick the best fit on quality, cost, and reliability.
• Negotiate the terms and sign a contract.
• Raise the purchase order and track that it gets fulfilled.
• Approve the invoice and pay on time.
• Keep records for compliance and later review.

If you want a simple way to handle the purchase-order part, we have a free purchase order template in Google Sheets. Log your suppliers and orders, record deliveries as they arrive, and the Open POs tab shows what is still outstanding. Click below, then choose Make a copy.

Procurement vs. purchasing

The two words get used interchangeably, but purchasing is really a part of procurement. Purchasing is the transaction: placing the order and getting the goods. Procurement is the wider process around it, including supplier research, relationship management, and contract negotiation.

Where technology helps

Most procurement work still runs on spreadsheets, and for good reason: they are flexible and everyone can use them. A tool like Sheetgo builds on that, cutting the manual copying between files, keeping records in one place, and giving you a clearer view of orders and suppliers.

Frequently asked questions