Sourcing vs. Procurement — What's the Difference?
Edited by Tayyaba Rehman — By Fiza Rafique — Published on December 25, 2023
Sourcing is the process of identifying and finding suppliers. Procurement encompasses the entire process of obtaining goods and services, from sourcing to purchase.
Difference Between Sourcing and Procurement
Table of Contents
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Key Differences
Sourcing focuses on identifying potential suppliers, evaluating them, and establishing relationships. It's the preliminary step where companies seek the best possible sources for the goods or services they require. Procurement, on the other hand, is a broader concept that includes not only sourcing but also activities like ordering, expediting, and payment.
Sourcing can be seen as a strategic function, determining the best suppliers based on factors like cost, quality, and reliability. It's about aligning with suppliers who fit the company's long-term goals. Procurement is more transactional, dealing with the day-to-day operations of getting the required goods or services into the company's possession.
While sourcing is generally concerned with building and managing supplier relationships and ensuring a consistent supply chain, procurement manages the tactical aspects of buying, such as negotiation of contracts, ensuring timely delivery, and handling any issues with orders.
Sourcing can sometimes involve a one-time decision, especially for companies seeking a supplier for a unique project. Once the decision is made, the sourcing process concludes. In contrast, procurement is an ongoing process that continues as long as the company needs to purchase goods or services.
In essence, sourcing sets the stage, providing the foundation and strategy for procurement activities. Procurement, meanwhile, is the action phase, where the plans made during sourcing are executed and goods or services are actually acquired.
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Comparison Chart
Primary Focus
Identifying and evaluating suppliers.
Purchasing goods and services.
Nature
Strategic
Transactional
Duration
Can be one-time for specific projects.
Ongoing, as long as goods or services are needed.
Relationship Management
Building and managing long-term supplier relationships.
Handling day-to-day interactions and transaction issues.
End Result
Establishment of supply sources.
Actual acquisition of goods or services.
Compare with Definitions
Sourcing
The act of identifying potential suppliers.
The company is currently sourcing new vendors for organic materials.
Procurement
Managing the acquisition of products from external sources.
With global procurement strategies, the company accesses materials from all over the world.
Sourcing
Evaluating suppliers based on criteria like cost, quality, and reliability.
We prioritize sustainable practices when sourcing our ingredients.
Procurement
Negotiation and enforcement of contracts with suppliers.
Procurement specialists secured favorable terms for the software license.
Sourcing
Establishing relationships with suppliers to ensure a steady supply chain.
Through effective sourcing, we've secured a reliable partner for our electronics components.
Procurement
The process of obtaining goods and services for business needs.
The office manager is in charge of the procurement of office supplies.
Sourcing
A strategic function to align with suppliers fitting company's goals.
Our sourcing team is always on the lookout for innovative partners.
Procurement
Ensuring the company's purchasing activities align with its operational needs.
Effective procurement is essential for the smooth running of the production line.
Sourcing
A person or thing from which something comes into being or is derived or obtained
Alternative sources of energy.
The source of funding for the project.
Procurement
The tactical activities involved in buying and receiving goods.
Their procurement department ensures timely delivery of all ordered items.
Sourcing
The point of origin of a stream or river.
Procurement
To get by special effort; obtain or acquire
Managed to procure a pass.
Sourcing
One, such as a person or document, that supplies information
Reporters are only as reliable as their sources.
Procurement
To bring about; effect
Procure a solution to a knotty problem.
Sourcing
(Physics) The point or part of a system where energy or mass is added to the system.
Procurement
To obtain (a sexual partner) for another.
Sourcing
To specify the origin of (a communication); document
The report is thoroughly sourced.
Procurement
To obtain sexual partners for others.
Sourcing
To obtain (materials or parts) from another business, country, or locale for manufacture
They sourced the spoke nuts from our company.
Procurement
(uncountable) The purchasing department of a company.
Sourcing
To outsource or insource (tasks or jobs, for example).
Procurement
(countable) The act of procuring or obtaining; obtainment; attainment.
He was responsible for the procurement of materials and supplies.
I have a lot of experience in the procurement of construction materials and sub-contracts.
Sourcing
Present participle of source
Procurement
Efficient contrivance; management; agency.
They think it done by her procurement. -Dryden.
Sourcing
The process by which something is sourced, or obtained from another place.
Procurement
The act of procuring or obtaining; obtainment; attainment.
Sourcing
The supply of resources needed by a business process.
Procurement
Efficient contrivance; management; agency.
They think it doneBy her procurement.
Sourcing
Finding the best origin for products or materials.
The boutique prides itself on sourcing artisanal goods from local craftsmen.
Procurement
The act of getting possession of something;
He was responsible for the procurement of materials and supplies
Common Curiosities
Can a company engage in sourcing without procurement?
Yes, a company can identify potential suppliers (sourcing) without immediately procuring goods or services.
Is procurement always a continuous process?
Generally, procurement is ongoing as companies continually need goods and services, but the frequency can vary.
What is the main goal of sourcing?
Sourcing primarily focuses on identifying and evaluating potential suppliers.
Why is sourcing considered strategic?
Sourcing aligns with long-term company goals, ensuring the best suppliers are chosen based on various factors.
Are procurement professionals involved in payment processes?
Yes, procurement often encompasses activities from ordering to payment.
Why might a company revisit its sourcing decisions?
Changing market conditions, supplier performance, or company needs can prompt a review of sourcing decisions.
How does procurement differ from sourcing?
Procurement encompasses the entire process of obtaining goods and services, including sourcing.
How does sourcing impact the cost of goods?
Effective sourcing can lead to cost savings by identifying suppliers that offer the best value for money.
Is technology impacting procurement processes?
Absolutely, technology is streamlining procurement through automation, analytics, and e-procurement platforms.
Can a company have separate sourcing and procurement teams?
Yes, some larger companies have distinct teams for sourcing (strategic) and procurement (transactional) activities.
Are contracts always a part of the procurement process?
Not always, but contracts often play a key role in formalizing terms with suppliers during procurement.
Are there risks involved in both sourcing and procurement?
Yes, both processes come with risks, such as supplier unreliability, quality issues, or unforeseen costs, which companies must manage effectively.
Does procurement only involve purchasing?
No, procurement also includes activities like contract negotiations, ensuring timely delivery, and handling order issues.
Can sourcing be done globally?
Yes, sourcing can be done locally, nationally, or globally based on company needs and strategies.
How important is relationship management in sourcing?
Very important; sourcing emphasizes building and maintaining long-term supplier relationships.
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Written by
Fiza RafiqueFiza Rafique is a skilled content writer at AskDifference.com, where she meticulously refines and enhances written pieces. Drawing from her vast editorial expertise, Fiza ensures clarity, accuracy, and precision in every article. Passionate about language, she continually seeks to elevate the quality of content for readers worldwide.
Edited by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
