What Is The Difference Between Procurement And Sourcing?
What Is The Difference Between Procurement And Sourcing?
Are you often perplexed by the terms ‘procurement’ and ‘sourcing’? Do you find yourself using the terms interchangeably, unaware of their subtle yet significant differences? If your answer is yes, then this blog post is for you. Understanding the distinction between procurement and sourcing can help businesses streamline their operations, optimize costs, and enhance overall performance. In this article, we’ll define both terminologies and explore how they differ from each other. So buckle up as we embark on a journey to demystify procurement and sourcing!
What is procurement?
procurement is the process of acquiring goods or services
sourcing is the search for and evaluation of possible suppliers
What is sourcing?
Procurement is the process of acquiring goods and services by negotiation. It typically refers to government procurement, but can also be used for businesses seeking to outsource work.
Sourcing is the search for a specific product or service from suppliers in order to meet customer requirements. The selection of a supplier is based on factors such as price, quality, delivery time, and compliance with specifications.
The Pros and Cons of Procurement vs. Sourcing
Procurement Vs. Sourcing: What’s The Difference?
When it comes to buying goods and services, procurement and sourcing are two very different options. Here’s a look at the pros and cons of each.
Procurement is when an organization hires a supplier to provide a certain good or service. This is often done through an established bidding process or by referring to a pre-selected list of suppliers.
Sourcing, on the other hand, is when an organization finds the best possible source for a specific good or service. This might involve doing research online, talking to friends and family, or meeting with potential suppliers in person.
The main advantage of procurement is that it can be done quickly and easily. Suppliers who are hired through this process are usually familiar with the organization’s needs and requirements, which makes them easier to work with. Additionally, procurement processes are usually more structured than those used for sourcing, which can help keep things organized and simplify the process.
The main disadvantage of procurement is that it can be expensive and time-consuming. It can also be difficult to find quality suppliers who meet all of your needs. In comparison, sourcing can be less expensive and faster but may result in fewer qualified candidates being found. Additionally, because sourcing is unstructured, it can be more challenging to stay organized andtrack progress throughout the process.
Conclusion
Procurement is the process whereby an organization acquires goods or services. Sourcing is the selection of a particular supplier or vendors to provide goods and services. Procurement can be done through direct procurement, where a company goes out to buy the products it needs, or indirect procurement, which happens when a business uses third-party suppliers. Sourcing takes many forms: local sourcing, which refers to buying from within your own country; in-country sourcing, which means buying from companies based within your own borders; and global sourcing, which involves businesses seeking suppliers globally.
